The Resilience and Growth Potential of China's AI and Tech Sector Amid US Export Restrictions

The U.S.-China tech rivalry has intensified in 2025, with export restrictions on advanced AI chips reshaping global semiconductor dynamics. Yet, amid these constraints, China's domestic chipmakers and tech giants are demonstrating remarkable resilience. For investors, this environment presents a paradox: stringent U.S. policies aim to stifle China's AI ambitions, but the same pressures are accelerating innovation and self-reliance in the sector.

The Rise of Self-Reliant AI Chipmakers

China's push for semiconductor self-sufficiency has catalyzed a new generation of chipmakers. Cambricon Technologies, now China's most valuable stockWhy Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4], exemplifies this trend. Its Siyuan 590 chip, compatible with leading AI models like DeepSeek and QwenHow overly aggressive bans on AI chip exports to China can backfire^[2], has positioned the company as a domestic alternative to U.S. rivals. Similarly, Moore Threads, founded by former NVIDIA executives, has developed GPUs comparable to older-generation NVIDIA productsHow overly aggressive bans on AI chip exports to China can backfire^[2], while Biren Technology's BR100 GPU claims to rival the H100 in performanceHow overly aggressive bans on AI chip exports to China can backfire^[2].

These advancements are not isolated. Enflame and Hygon Information Technology—the latter with AMD heritage—are supplying GPUs and CPUs to local data centersHow overly aggressive bans on AI chip exports to China can backfire^[2], reducing reliance on foreign suppliers. Meanwhile, tech giants like Huawei and Alibaba are doubling down on in-house R&D. Huawei's CloudMatrix 384 system, though still trailing U.S. benchmarks, showcases improved system-level performanceWhy Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4], while Alibaba's T-Head unit leverages open-source RISC-V architecture to develop AI-optimized chipsChip Challenge: Goodbye Export Controls^[3].

Navigating U.S. Export Controls: Policy Shifts and Workarounds

U.S. export restrictions, initially designed to curb China's access to advanced chips, have faced unintended consequences. For instance, Huawei's 2025 AI chip production is capped at 200,000 units—a fraction of the 1 million NVIDIA chips imported in 2024How the Trade War is Reshaping the Global Economy^[1]. However, Chinese firms have adapted through smuggling networks and partnerships with shell companies. Huawei's collaboration with a Taiwanese supplier to acquire 2 million chipsHow the Trade War is Reshaping the Global Economy^[1] underscores the sector's ingenuity in bypassing barriers.

Recent policy shifts under the Trump administration further complicate the landscape. A new framework allows U.S. chipmakers to sell certain AI chips to China, provided they share 15% of revenue with the U.S. governmentChip Challenge: Goodbye Export Controls^[3]. While this aims to monetize access, critics warn it could inadvertently fund China's self-sufficiency driveWhy Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4].

Investment Opportunities: Balancing Risk and Reward

For investors, the key lies in identifying companies poised to benefit from China's AI ecosystem expansion. Cambricon and Moore Threads stand out due to their rapid valuation growth and strategic partnerships with AI model developersHow overly aggressive bans on AI chip exports to China can backfire^[2]Why Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4]. Biren Technology's BR100, if validated by real-world performance, could disrupt the GPU marketHow overly aggressive bans on AI chip exports to China can backfire^[2]. Meanwhile, Huawei and Alibaba offer diversified exposure to AI infrastructure and cloud computingChip Challenge: Goodbye Export Controls^[3]Why Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4].

However, risks persist. Domestic chips often require more units and energy to match U.S. performanceWhy Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4], and U.S. policies remain volatile. Yet, these challenges also create tailwinds for innovation. As Brookings analysts note, overly aggressive bans may backfire by incentivizing China to invest further in self-relianceHow overly aggressive bans on AI chip exports to China can backfire^[2].

Strategic Outlook

China's AI sector is no longer a passive victim of U.S. policies but an active participant in reshaping global tech dynamics. For investors, the focus should shift from short-term regulatory noise to long-term structural trends: the rise of RISC-V ecosystems, the maturation of domestic GPU architectures, and the integration of AI into edge computing networksWhy Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4].

While U.S. export controls will continue to evolve, the resilience of Chinese chipmakers suggests that self-reliance is not just a policy goal but a market reality. As Rand Corporation analysts argue, smart chip controls are critical, but so is recognizing the adaptive capacity of China's tech sectorWhy Export Controls Work: 5 Debunked Myths About U.S.-China AI Competition^[4]. For those willing to navigate the risks, the rewards in this high-stakes arena could be transformative.