“grey market” smugglers gonna keep working on it

Until now it was perfectly legal to buy nVidia chips in China. It was the US that was blocking export.

Which way though? From the USA to China or China to the USA?

Chinese tech dominance is inevitable and anything the US tries to do to contain it will just hasten the inevitable.

We've heard that about Japan in the 80s and the Soviet Union a couple of decades earlier. While China is a mighty competitor, they also have structural problems they don't hesitate to sweep under the rug.

The jury is out there about whether China can take a meaningful lead in any major technological field the US and Europe are actively invested in.

> they also have structural problems they don't hesitate to sweep under the rug

I have the feeling the US is creating giant problems by putting massive tariffs on allies and pretending they don't hurt themselves.

The tariffs are really just a symptom of the underlying disease that is fully eroded trust in the stability of the United States. If everything can change at any time, and the president makes up his mind about anything from tariffs to wars to brand logos, turning a full 180 degrees every so often, how could you do long-term business?

That is exactly the issue.

Why would you invest billions to build a factory when the president at anytime just decides that you can no longer build it or it's of "national security" and forces you to sell it at a loss?

At that point I would build the factory in China or India were the market is much bigger and at the moment the risk appears lower.

Precisely.

Japan was destroyed by US as it was dependent and subservient to US as a market as well with US army and navy all over Japan. They unlike China could not say fuck off

Japan wasn't "destroyed" - they fell into the same trap that most emerging countries fall into eventually. Massive economic growth -> people become more wealthy -> they put it all into real estate -> real estate market collapses -> people are disillusioned, stop spending and growth crumbles. Happens to many nations that try to enter the group of high-income economies, same with China. The problem is that people don't trust any other asset besides housing to put their savings in. That creates a bubble and a lack of private investment in other parts of the economy.

look up the plaza accord. It led to a bubble that eventually burst and an uncompetitive export industry as the JPY doubled.

Two sides of the same coin. The yen appreciation didn't change the trade deficit the US had with Japan substantially. Japan's own actions after the plaza accord (very loose monetary policy) lead to the asset bubble I described. That's because domestic consumption was weak and everyone used excess savings for the housing market - rather than buying more goods domestically. Which lead to the bubble I described.

If you read the Wikipedia article more carefully you would have understood that the loose monetary policy was an effect of the Plaza Accord, hence why I mentioned it.

I kinda feel their bubble burst would have happened anyway but they wouldn’t treat themselves to a plaza accord kind of deal.

China is ten times bigger than Japan was at the time, a big enough difference in quantity has its own quality. China also has a much easier/cheaper access to natural resources compared to Japan, both internally and from external partners that are shunned by the US (think Russia or Iran).

That's not an effective reply to GP because during the process GP describes ("Massive economic growth -> . . .") Japan has enjoyed complete freedom to engage in ocean shipping and ocean trade unless perhaps you want to argue that the knowledge that this freedom to trade could stop at any time (e.g., because of a new world war) prevented Japanese decision makers from making full use of ocean trade.

Also, China would not have been able to rise anywhere near as high as it has without intensive use of ocean trade.

In other words, although national economic independence matters a lot, it matters only in specialized circumstances, namely, war that is not restricted to only a few countries, but rather spreads to cover large areas of ocean; Washington's deciding to stop policing the world ocean; or Washington's deciding to stop enforcing a policy of freedom of shipping and freedom of ocean trade for every nation (modulo US sanctions).

The US cannot sanction China's shipping of goods.

The median Chinese in 2025 is also much poorer (edit: and much older [2] and less educated [3]) than the median Japanese in the 1980s or 1990s.

China has built a successful tech pipeline, but it doesn't translate to significant prosperity in a country where median disposable household incomes are around $400/mo [0] - much lower than their peers in Thailand [1]. And China's HDI only caught up with Thailand's over the past 2-3 years, and China's GDP per capita has been stagnant for 4 financial years now.

This does NOT imply Chinese collapse, but it does highlight real issues that exist with the China story.

From a power projection perspective, China has capabilities that very few nations have and can tie with the US, but that has not translated to mass prosperity in the way growth in 1970s and 1980s Japan did. It is still an open question about whether or not China "Japanifies" or not.

China is now at a crossroads, similar to what South Korea, Thailand, and Malaysia faced in the 1990s.

As long as the Xi admin remains avowedly opposed to what he termed "Welfarism" ("福利主义典范国家，中产塌陷、贫富分化、社会撕裂、民粹喧嚣，这不乏警示— 防止落入“福利主义”养懒汉陷阱"), Chinese growth will sputter.

[0] - https://www.stats.gov.cn/english/PressRelease/202501/t202501...

[1] - https://www.nso.go.th/nsoweb/storage/survey_detail/2023/2023...

[2] - https://ourworldindata.org/grapher/median-age

[3] - https://globaldatalab.org/shdi/table/msch/CHN+JPN/?levels=1+...

It definitely has resulted in mass prosperity.

> The median Chinese in 2025 is also much poorer than the median Japanese in the 1980s or 1990s.

Yes, and that’s a big plus for China, it means that there’s still room for productive growth. The also means that the price of labor will still continue to be competitive.

> it means that there’s still room for productive growth

The median Chinese in 2025 is also much older than the median Japanese was in 1990 when their bubble burst. Without welfare expansion and a broad project to increase the prosperity of the median Chinese household, growth will sputter - as it already is [0]

Xi's admin remains avowedly opposed to what he termed "Welfarism" ("福利主义典范国家，中产塌陷、贫富分化、社会撕裂、民粹喧嚣，这不乏警示— 防止落入“福利主义”养懒汉陷阱") [1], and almost all stimulus provided is supply-side.

Chinese households need to either earn enough so they can save for a rainy day and consume, or the state needs to dramatically increase the scope of it's social safety net to incentivize spending.

China needs a "New Deal" style welfare reform if it wants to escape Japanification at this stage.

> The also means that the price of labor will still continue to be competitive.

It's isn't anymore. China's costs have caught up with those of Mexico and Malaysia's, so cost sensitive manufacturing began leaving over a decade ago to Vietnam, Mexico, and India.

High value manufacturing has taken off in China, but generates very few jobs, because a heavily automated factory requires much fewer and much more educated employees, which locks out a large number of Chinese as the average age of schooling amongst working age Chinese is around 8-9 years [2]

[0] - https://www.reuters.com/world/china/chinas-economy-slumps-au...

[1] - http://theory.people.com.cn/n1/2021/1116/c40531-32283350.htm...

[2] - https://ourworldindata.org/grapher/average-years-of-schoolin...

EVs, Batteries, Civilian Drones, Quantum Communications, Robotics (Industrial & Consumer), Clean Energy (Solar, Wind, Nuclear tech).

Have you been living under a rock the past couple of years?

Don't be duped by China's clean energy talk. Their energy infra is mainly coal and they continue to build (dirty) coal plants.

They sell you solar infra so that you can feel good about protecting the world while they continue to build coal plants. For reference, in 2023 they built 95% of the world's new coal plants...

Don't be fooled.

You're right, but it's not quite so black and white. They are certainly continuing to build out coal capacity, but they are building solar/hydro/nuclear/wind generation at a greater rate, such that the proportion of generation from coal has been falling, from over 70% ten years ago, to about 55% currently.

They also connected more solar to their grid than the rest of the world combined. China is massively increasing their power generation capacity and yes most of it is still coal. They are also building 20+ nuclear reactors. The scale of what China is doing is mind boggling.

Unfortunately for the US, the administration is also furtively generating brand new structural problems.

I think that The Plaza Accord (1985) ended up crippling Japan economically. The Plaza Accord is an excellent example of my country benefiting from military and economic power - unfortunately, the days of us getting away with this kind of behavior are probably over.

That said, we will probably get away with bullying Europe for a while longer. Canada seems to be standing up to USA pressure fairly well. Europe needs to do the same, and they will probably eventually get there.

I'm interested, how did US economic/military power feed in to the Plaza Accord?

Short answers: dollar dominance and market access leverage.

The argument for benefits of US economic power are clear. Less clear is military power:

The Plaza Accord was framed as cooperation among G5 allies. But in practice U.S. security guarantees gave it disproportionate influence. Japan, for example, had little independent military capability, so its security reliance on the U.S. translated into willingness to accept U.S. economic pressure.

> The Plaza Accord was framed as cooperation among G5 allies. But in practice U.S. security guarantees gave it disproportionate influence. Japan, for example, had little independent military capability, so its security reliance on the U.S. translated into willingness to accept U.S. economic pressure.

Really hit the nail on the head here.

If we extrapolate this way of thinking to Europe, the US keeps pushing Europe to fund more of its own defense. If Europe does so, the US will probably find that a more independent Europe may be less likely to agree with the US on other global issues since Europe will need the US less in Europe.

They made Japan agree to doubling the exchange rate of the Yen, which crashed their exports among other things.

> they also have structural problems they don't hesitate to sweep under the rug

lol, people has been saying this for the past two decades. The truth of the matter is everyone and their mom has "structural problems". Each time I visit their quality of life is only improving there and the pace of progress hasn't slowed down

EVs/solar counterexamples?

The US isn't seriously invested in either due to poor demand and irregular government interest. The US wants fossil (oil and gas) and trucks, two areas where it crushes China (for better or worse).

Market cap of Tesla is much bigger than other American car companies, right? I think that ought to imply that the US is invested in EVs. And compare to the situation in Germany where desires to prop up incumbent automakers lead to some crazy policies, which suggests the US isn’t as wedded to incumbents as it could be. Similarly there were USG efforts to incentivise EVs with subsidies.

I’m not totally sure about the above and even less sure about solar, but it feels like it is pretty wrong to say that the whole US didn’t want either to happen. I think on average and more so in certain federated parts, the US did want to make EVs and solar happen more than they did.

Even if your arguments are true, I think we should treat ‘I failed because I wanted to fail’ as a failure of US industrial capacity, not as a success.

Does TikTok not count?

> The jury is out there about whether China can take a meaningful lead in any major technological field the US and Europe are actively invested in.

They might not have to do that to dominate. They'd dominate if they're just near the cutting edge and cheaper.

And the US and Europe have shown a lot of shortsightedness and incompetence by abandoning technological fields when faced with Chinese competition (e.g. solar panels). They're too blinded by free market economics to make the right decisions.

Chinese semiconductor dominance is not imminent and US containment has been somewhat effective. I don’t think that will hold on a generational timeline, but it will be hard to overcome.

You don’t think the export controls on Nvidia chips accelerated Chinese investment in ML processors and therefore their independence -> dominance in the space?

Building SOTA semiconductors is more art than science. All the best artists are in Taiwan.

You don't just buy (or copy) and ASML litho and turn it on. Just like you don't buy a horsehair brush and start painting Picassos. It's even more difficult than that because there are something like ~1000 sub processes and each one needs a world renowned artist in that specific art to get it done.

Its the reason why even Samsung can't match TSMC despite having the same tools and capital.

Or intel … but I think Samsung comes considerably closer. I’m not close to it.

The export controls made it difficult for Chinese companies to acquire large numbers of GPUs, which prevented them from expanding business models that rely on buying more GPUs to serve more customers, which means that Chinese companies have much, much lower budgets for GPU procurement than their American counterparts. https://chinai.substack.com/p/chinai-323-the-ai-deflation-of...

So a new homegrown chip would have to capture a very large share of this relatively small market to make significant volume. That makes it rather risky for profit-driven investors.

Politically directed investment probably increased, but in the end the private sector also needs to be on board.

The market size for chinese chips is much like EVs. The entire world outside of the US. Like I said, Chinese dominance is inevitable.

Most of the rest of the world can buy Nvidia if they want to. And I don't think the EV comparison works, since China already had a large domestic market and established ICE car companies who could afford to electrify some of their lineup and slowly gain market share this way.

That is not at all the case. Biden export controls for nvida chips are still in place. China also has a large domestic market for chips. The rest of the world would gladly buy competitive Chinese chips.

Semiconductor lead is inevitably going to fall within the decade. So will the military hopes of ever protecting Taiwan.

That's a very pessimistic take, or optimistic I guess, depending on perspective.

Looking at the Chinese semiconductor development trajectory, and considering that TSMC won't be sitting on their hands, "within a decade" seems really unlikely.

Taiwan and China are not like north and south korea. People move between countries freely. Many TSMC engineers have moved to the mainland.

China has immense engineering capability and is replicating the entire western semiconductor supply chain within its borders.

They have the money, the engineering capability, the will and full support from the government. It is inevitable.

I am aware, I live in Taiwan. While TSMC engineers can be poached "move between countries freely" is not true because moving from China to Taiwan is not so easy.

The key word you mention is "replicating." They'll be chasing for a while still, and it's not clear that they'll be able to leap ahead. Copying is much easier than real innovation.

I was under the impression, for years, that the US had the appropriate government, scientists and engineering in place to protect the castle. However given what I've seen in the last few years - I agree that it seems inevitable China will surpass the US in the next decade and will hold both cards and a grudge.

It's amazing how China has doubled down into STEM and green energy while the US has done exactly the opposite. The CHIPS Act propped up a company further driven into the ground by Pat Gelsinger. The last few administrations have had no focus on driving innovation and technology - only propping up the Tech Bro market making money off of attention and ads. Maybe, just maybe, the US should stop electing geriatric and short term gains ignorance?

The US needs to dig its head out of its ass if it wants to continue to be recognized as the global power it once was.

In my opinion 2008 is the year when the US started to fade as a center of innovation and global power.

https://en.wikipedia.org/wiki/Lemon_socialism

Taiwan could be protected if they were given practical control of nuclear weapons or similar, i.e. nuclear weapons sharing.

Securing Taiwanese independence is going to be necessary for the EU to ensure that there isn't a US microchip monopoly, and the only way the EU can do this is by the aforementioned means.

Zelensky at the MSC 2022: “If … results do not guarantee security for our country, Ukraine will have every right to believe that the Budapest Memorandum is not working and all the package decisions of 1994 are in doubt”[0]. 4 days later Russia invaded Ukraine. At the time it was said that Ukraine pursuing nuclear weapons was the last straw, but who know really.

If Taiwan is going to place nuclear weapons on its territory the conflict would probably escalate quickly.

0. https://kyivindependent.com/zelenskys-full-speech-at-munich-...

Could well be a trigger. This is a reason to do it quickly by having already existing, tested nukes handed over for use by the threatened state.

There is a problem with this kind of reasoning though. It's like, somebody shows up 'try to grab my gun and I'll shoot' but the thing is, he might shoot anyway, and if you grab the gun, maybe you'll get hold of it.

When someone threatens something, that's not reason for stepping down, passivity or anything like that, it's reason to immediately risk everything on an attack to take away the thing he has that allows him to threaten you. By threatening something he only demonstrates that he must be attacked immediately.

I like an example I gave earlier with hostages. It's Monday, someone has taken a hostage and threatens to kill unless left alone. The next day he's taken another, he has the same threat. On friday, he has five. Now, you realise you should have attacked on Monday when your attack only risked one death.

So today, the question might be 'why didn't we start building nukes last year?'

> So will the military hopes of ever protecting Taiwan.

I don't think there are too many military analysts who would claim that the USA could "protect" Taiwan if China was really determined. The USA still retains the ability to significantly increase the cost, both militarily and economically, of an invasion, and relies on this - successfully, to date - as a deterrent.

I think most people recognize however, even in Taiwan, that in terms of pure practical facts on the ground, not even the world-beating US military can overcome geography. Taiwan is 100 miles off China's cost, Guam is 2800 miles away. It is difficult for me to imagine anything, barring some incredible technological advantage that the USA shows no sign of possessing, that could outweigh such a tremendous home-turf advantage.

It is very hard to come up with a realistic, or even semi realistic, scenario in which China does not end up with Taiwan if it really wanted it.

See Huawei and Xiaomi everywhere else outside US, or how encryption standards went down in the days of PGP book with the printed code.

Let's be fair, US export controls are one of the reasons that China is ramping up research/development of such tech (especially AI now).

Considering the amount of sanctions coming from US (and EU), it's no wonder that "the rest of the world" is trying to "build their own" <thing> now.

Yep that is what I meant.

Dialectical Materialism much?

Tries to do to contain.. like letting u.s. companies pump trillions into the Chinese economy?

I think it wasn't.

The EU + US is reasonably close to what China appears to be planning as its long-run population, so if the US and the EU had a real partnership and co-operated effectively they could probably have kept up with China.

Now of course, that isn't what's happened and I think even under Biden there were strong efforts to limit competition from the EU and to disadvantage its industry, so it was always going to go this way, but with a real effort I think something different could have been achieved.

The current administration wants the EU to collapse, so we're very far away from that reality.

Yes.

> Chinese tech dominance is inevitable and anything the US tries to do to contain it will just hasten the inevitable.

Only if we let our business leaders and economists make the decisions.

It's already done - they have unmatched engineering capabilities.

Whatever resources you are thinking they are much better.

- math and engineers- soft/hard. they are #1 in the world, and their education system is ready to produce in 2-3 years even more in any domain.

- electricity for ai, they are producing nuclear plants and solar like candies.

- semiconductor industry - NVIDIA + TSMC is really the last frontier. They are leaders everywhere else.

The US is run by lawyers, China is run by engineers.

Unfortunately for the software/AI industry, this likely means the same outcome as every other industry China has dominated: displacement.

If you work in software and you're complaining about your situation now... this is just the beginning. China will capture major market share, and AI will transform what remains.

The US can't even ban TikTok, let alone address the broader presence of Chinese cameras, drones, and other devices packed with AI and software. Meanwhile, the EU is eager to buy Chinese cars loaded with everything from software to chips and hardware.

you all can see a capitulation messages from western media:

US made phone will cost 30% more or 60% whatever. Basically refusing any attempt to protect the market and invest into engineering power etc.

Just to remind you how china got here. They place crazy restictions, they ban google, car manufactures, etc. and stimlate stimulate invest for decades.

Now this strategy pays off, and we will be with no jobs.

> It's already done - they have unmatched engineering capabilities.

Nothing is ever done.

The US and West won't be able to return to its period of unrivaled technological dominance, but it's not inevitable that they will be dominated either.

But to avoid domination it has to 1) abandon its suicidal fixation in neoliberalism, 2) abandon its lazy assumption of technological dominance so it can start learning and investing in lost capabilities, and 3) kick business and consumer interests out of the driver's seat.

There's actually some progress being made on 1 & 2, but unfortunately not so much on 3.

> you all can see a capitulation messages from western media:

> US made phone will cost 30% more or 60% whatever. Basically refusing any attempt to protect the market and invest into engineering power etc.

Honestly, I think that is actually one of short-sighted partisan politics, not some kind of capitulation. Trump likes tariffs and advocates for bringing manufacturing back to the US, and nowadays liberals first and foremost oppose Trump and everything he stands for. They lost the last election in part due to inflation they caused, and now they're trying to win the next one on inflation they can pin on Trump.

Neither the US nor EU have enough of a functioning political system capable of such reforms. China dominance is inevitable baring a complete political overhaul.

Is this supposed to signal confidence in the chips already available on China's domestic chip market, or is it primarily aimed at boosting that market to make it ready?

I think those are both the case: they’re telling Chinese companies to invest in domestic hardware–implicitly also saying things like being prepared to stop using CUDA–and that means the hardware vendors know not to skimp on getting there (a nicer version of burning the landing boats on the beach).

It’s also an interesting signal to the rest of the world that they’re going to be an option. American tech companies should be looking at what BYD is doing to Tesla, but they’re also dealing with a change in government to be more like Chinese levels of control but with less maturity.

My cynical view is that it's mostly trade war and nationalism. If you follow the official PRC position, the chips are already made in China because TW is CN... Practically buying TW chips is boosting it's economy and hence funding it's military so from that perspective that makes sense. From long term development perspective this will absolutely boost national market... however that will take an insane amount of time. If you buy into AI is going to change everything hype, this move is a huge handicap and hence a boon to external economies. And I am probably missing a ton of viewpoints... politics meh

if you don't know what you're talking about you don't have to say anything, you know

Yes. :)

How big a deal is it to be on the cutting edge with this? Given that models seem to be flattening out because they can't get any more data, the answer is "not as much as you would think".

Consequently, a generation or 2 behind is annoying, but not fatal. In addition, if you pump the memory up, you can paper over a lot of performance loss. Look at how many people bought amped up Macs because the unified memory was large even though the processing units were underpowered relative to NVIDIA or AMD.

The biggest problem is software. And China has a lot of people to throw at software. The entire RISC-V ecosystem basically only exists because Chinese grad students have been porting everything in the universe over to it.

So, the signal is to everybody around this that the Chinese government is going to pump money at this. And that's a big deal.

People always seem to forget that Moore's Law is a self-fulfilling prophecy, but doesn't just happen out of thin air. It happens because a lot of companies pump a lot of money at the engineering because falling off the semiconductor hamster wheel is death. The US started the domestic hamster wheel with things like VHSIC. TSMC was a direct result of the government pumping money at it. China can absolutely kickstart this for themselves if the money goes where it should.

I'm really torn about this. On the one hand, I hate what China does on many, many political fronts. On the other hand, tech monopolies are pillaging us all and, with no anti-trust action anywhere in the West, the only way to thwart them seems to be by China coming along and ripping them apart.

Arguably, the leading RISC-V IP is from US firms like SiFive; it has also caught major traction with NVDA in custom products, and US Govt for various industries, and even Redhat is now supporting RH on Risc-V

Microchip Inc partnered w US Govt on the aerospace angle and funded Canonical for linux ports. Their Polarfires and now Euro aerospace like Gaisler are heading in the same direction. US Govt/DARPA and others have been funding risc-v ports for years, to include mainly automated porting.

There are big differences between lowend profile-challenged SBCs and the work of NVDA, Microchip Inc, and the US Govt in the much more highend GPU related, and safety critical industries.

With Heavyweights like IBM/Redhat now on risc-v joining canonical and others, the SW side is definitely improving

TSMC btw, has always been about labor arbitrage

200% tariff incoming :-)

"Speaker Johnson says China is straining U.S. relations with Nvidia chip ban" - https://www.cnbc.com/2025/09/17/china-us-nvidia-chip-ban.htm...

Translation: "We are angry with China that they wont let the US undermine itself, and sell its strategic advantages to them..."

> "Speaker Johnson says China is straining U.S. relations with Nvidia chip ban"

Oh, the irony.

Are they allowed to rent them from server farms, datacenters, etc. located outside China that are able to procure them?

"Are they allowed to rent them from server farms, datacenters, etc. located outside China that are able to procure them?"

alicloud has many cluster outside china, so they probably can because many friendly country with china has it

but it would be the same with US power play, they only permit anyone that they accept

That is going to really slow LLM development in China. But more GPUs for everyone else!

They have more electric power (also cheaper), more data centers. I bet AI development will be slower elsewhere.

Yup - at some level of scale it's very much an infrastructure game.

No amount of trade war politics will make up for a lack in infrastructure investment.

In 24 months, US hyperscalers will be training models on GPUs/XPUs with 16A process technology and HBM4E. The gap between the raw processing power of US and Chinese AI hardware will be widening.

I wish I had your confidence being able to forecast 24 months ahead. In 24 months TSMC could be a smoking crater.

There won’t be 16A manufacturing here in the USA.

Probably ever.

We live in extremely dangerous uncertain times.

Any forecast that long is worthless.

You seem extremely pessimistic. TSMC SoW-X will put an entire wafer worth of chips on a single substrate and be incredibly fast.

https://wccftech.com/tsmc-cutting-edge-sow-x-packaging-set-f...

Why would you say 16A would never be manufactured in the United States? It is of course TSMC’s plan of record.

I mean, progress is already getting slow in llm development space and their qwen models are, well, good enough for time being. Meanwhile, its good for the world that they are working on their own chips, that way nVidia will have to stop being comfortable.

This is step in good direction for everyone except nvidia and its chinese distribution network