Can US tech firms afford to sit out China? Nvidia CEO says no

Jensen Huang argues export restrictions hurt American competitiveness as Chinese chipmakers close the technology gap.

Nvidia's Jensen Huang has issued a stark warning to Washington policymakers: China's semiconductor capabilities are catching up faster than expected, and restricting US companies from competing there may be the wrong strategy.

Speaking on the BG2 podcast, and as per reported by South China Morning Post, Huang described China as being just "nanoseconds behind" the US in chip technology—a remarkable assertion given the extensive export controls imposed on advanced semiconductors over the past three years.

His message to the Biden and now Trump administrations is clear: allowing American tech companies to compete globally, including in China, would better serve US interests than isolationist policies.

"We've got to go compete," Huang said, advocating for a strategy that would "proliferate the technology around the world" to "maximize America's economic success and geopolitical influence."

What does this mean?

For technology partners and resellers, Huang's comments underscore a growing tension in the global IT supply chain. Export restrictions designed to maintain US technological superiority may actually be accelerating China's push toward self-sufficiency—creating new competitors rather than containing them.

The evidence supports Huang's concerns. Huawei recently unveiled an ambitious AI chip roadmap featuring clustering methods explicitly designed to work around Nvidia's ecosystem. Meanwhile, Chinese cloud giants Alibaba, Tencent, ByteDance and Baidu are pouring resources into in-house chip development to reduce dependence on foreign suppliers.

A new generation of Chinese chipmakers is also emerging. Cambricon Technologies' valuation has soared, Moore Threads Technology is preparing for a Shanghai IPO, and startups like Enflame and MetaX are attracting significant investor attention.

These developments create both challenges and opportunities for industry players. On one hand, Nvidia's restricted access to the world's second-largest economy limits growth potential. On the other, Chinese alternatives may offer new partnership opportunities—though questions remain about their performance and reliability compared to Nvidia's industry-leading GPUs.

Walking a tightrope

Nvidia's situation epitomizes the complexity facing US tech vendors. Earlier this year, Washington abruptly blocked exports of the H20—a deliberately downgraded chip Nvidia designed to comply with existing restrictions. The ban was later lifted after the company agreed to a 15% levy.

Despite these obstacles, Huang expressed optimism that China would remain open to foreign investment, citing Beijing's stated commitment to maintaining "an open market."

"What's in the best interest of China is for foreign companies to invest in China, compete in China and for them to also have vibrant competition themselves," he said.

Yet China's actions suggest a more calculated approach. While regulators gave Huang a warm reception during his recent visit, the nationwide semiconductor self-sufficiency campaign continues full throttle.

Betting big on AI's future

Huang dismissed concerns about overcapacity in the AI sector, arguing that the transformation from general-purpose to accelerated computing has barely begun.

"Until we fully convert all general-purpose computing to accelerated computing and AI, I think the chances [of a glut] are extremely low," he said. "Nobody needs atomic bombs. Everybody needs AI."

Nvidia is backing that conviction with massive investments, including a $5 billion stake in Intel and plans to invest up to $100 billion in OpenAI to build AI data centres.

These moves have rewarded investors handsomely. Nvidia's stock has surged more than 62 percent over six months to $178, pushing its market capitalization to $4.3 trillion.

The bottom line

Huang's comments raise critical strategic questions. As Chinese chipmakers narrow the gap and develop parallel ecosystems, should resellers prepare for a bifurcated global technology market? And if export restrictions continue tightening, how can US-aligned partners maintain competitiveness in regions where Chinese alternatives dominate?

Huang clearly believes American companies can compete and win on merit—if given the chance. Whether Washington agrees remains to be seen.