If CUDA isn't that strong of a moat/tie-in and Chinese tech companies can seemingly reasonably migrate to these chips, why hasn't AMD been able to compete more aggressively with nVidia on a US/global scale when they had a much longer head start?
1. AMD isn’t different enough. They’d be subject to the same export restrictions and political instability as Nvidia, so why would global companies switch to them?
2. CUDA has been a huge moat, but the incentives are incredibly strong for everybody except Nvidia to change that. The fact that it was an insurmountable moat five years ago in a $5B market does not mean it’s equally powerful in a $300B market.
3. AMD’s culture and core competencies are really not aligned to playing disruptor here. Nvidia is generally more agile and more experimental. It would have taken a serious pivot years ago for AMD to be the right company to compete.
As far as I know neither company has a reputation for reliable drivers. The situation is much better these days but it's still a crapshoot. At least on linux; I can't speak for windows.
> If CUDA isn't that strong of a moat/tie-in and Chinese tech companies can seemingly reasonably migrate to these chips, why hasn't AMD been able to compete more aggressively with nVidia on a US/global scale when they had a much longer head start?
It's all about investment. If you are a random company you don't want to sink millions in figuring out how to use AMD so you apply the tried an true "no one gets fired for buying Nvidia".
If you are an authoritarian state with some level of control over domestic companies, that calculus does not exist. You can just ban Nvidia chips and force to learn how to use the new thing. By using the new thing an ecosystem gets built around it.
It's the beauty of centralized controlled in the face of free markets and I don't doubt that it will pay-off for them.
I think they'd be entirely fine just using NVIDIA, and most of the push came from US itself trying to ban export (or "export", as NVIDIA cards are put together in the china factories...).
Also AMD really didn't invest enough in making their software experience as nice as NVIDIA.
AMD probably don't have chinese state backing, presumably, where profit is less of a concern and they can do it unprofitably for many years (decades even) as long as the end outcome is dominance.
This was in terms of breaking the Nvidia monopoly. Mojo is a variant of python. When looking at the difficulty of migrating from CUDA , learning python is pretty small barrier.
Sure, you can keep buying nvidia, but that wasn't what was discussed.
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.
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.
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.
> 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 they quality of life is only improving there and the pace of progress hasn't slowed down
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?
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.
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.
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.
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).
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 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.
> 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]
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).
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...
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.
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).
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?
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.
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.
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.
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.
There's a very important point made in the article - with recent export controls, domestic Chinese firms don't need to beat Nvidia's best, but only the cut-down chips cleared for Chinese export.
The AI race is like the nuclear arms race. Countries like China will devote an inordinate amount of resources to be the best - it may take a year or two, but in the grand scheme of things that is nothing.
And NVIDIA will lose its dominance for the simple reason that the Chinese companies can serve the growing number of countries under US sanctions. I even suspect it won't be long before the US will try to sanction any allies that buy Chinese AI chips!
China and Russia collectively have a talent pool dense enough to build future products and services the rest of the world uses, if China can produce comparative hardware for AI.
This is not true and a lot of Nvidi’s chips are smuggling into the country. There’s a ton of domestic pressure to be the leading chip producers. It’s part of China’s strategic plan called Made in China 2025
Apparently DeepSeek’s new model has been delayed due to issues with the Huawei chips they’re using. Maybe raw floating point performance of Chinese chips is competitive with NVIDIA, but clearly there’s still a lot of issues to iron out.
I'm sure there are LOTS of issues that need to be addressed, but the demand for the chips are so high that the incentives are overwhelmingly in favor of this continuing. If the reported margins on the Nvidia chips are as high as the claims make it out to be (73+% ??) this will easily find a world wide market.
It was also frustratingly predictable from the moment the US started trying to limit the sales of the chips. America has slowed the speed of Chinese AI development by a tiny number of years, if that, in return for losing total domination of the GPU market.
>America has slowed the speed of Chinese AI development by a tiny number of years, if that, in return for losing total domination of the GPU market.
I'm open to considering the argument that banning exports of a thing creates a market incentive for the people impacted by the ban to build aa better and cheaper thing themselves, but I don't think it's as black and white as you say.
If the only ingredient needed to support massive innovation and cost cutting is banning exports, wouldn't we have tons of examples of that happening already - like in Russia or Korea or Cuba? Additionally, even if the sale of NVIDIA H100s weren't banned in China, doesn't China already have a massive incentive to throw resources behind creating competitive chips?
I actually don't really like export bans, generally, and certainly not long-term ones. But I think you (and many other people in the public) are overstating the direct connection between banning exports of a thing and the affected country generating a competing or better product quickly.
> If the only ingredient needed to support massive innovation and cost cutting is banning exports, wouldn't we have tons of examples of that happening already - like in Russia or Korea or Cuba?
That's just one of the ingredients that could help with chance of it happening, far from being "the only ingredient".
The other (imo even more crucial) ingredients are the actual engineering/research+economical+industrial production capabilities. And it just so happens that none of the countries you listed (Russia, DPRK, and Cuba) have that. That's not a dig at you, it is just really rare in general for a country to have all of those things available in place, and especially for an authoritarian country. Ironically, it feels like being an authoritarian country makes it more difficult to have all those pieces together, but if such a country already has those pieces, then being authoritarian imo only helps (as you can just employ the "shove it down everyone's throat until it reaches critical mass, improves, and succeeds" strategy).
However, it is important to remember that even with all those ingredients available on hand, all it means is that you have a non-zero chance at succeeding, not a guarantee of that happening.
Russia and Cuba? Why not mention Somalia and Afghanistan? They're about equally relevant in this context.
South Korea might have the capability to play this game (North Korea certainly doesn't), but it hasn't really had the incentive to.
Which brings us to the real issue: an export ban on an important product creates an extremely strong incentive, that didn't exist before. Throwing significant national resources at a problem to speculatively improve a country's competitiveness is a very different calculation than doing so when there's very little alternative.
I mean, I don’t know how long the NVIDIA moats can hold. With this much money at stake, others will challenge their dominance especially in a market as diverse and fragmented as advanced semiconductors.
I think that NVIDIA’s moat is the US government. Remember our government’s efforts to prevent the use of Huawei cell infrastructure in Europe and around the world?
I am a long time fan of Dave Sacks and the All In podcast ‘besties’ but now that he is ‘AI czar’ for our government it is interesting what he does not talk about. For example on a recent podcast he was pumping up AI as a long term solution to US economic woes, but a week before that podcast, a well known study was released that showed that 95% of new LLM/AI corporate projects were fails. Another thing that he swept under the rug was the recent Stanford study that 80% of US startups are saving money using less expensive Chinese (and Mistral, and Google Gemma??) models. When the Stanford study was released, I watched All In material for a few weeks, expecting David Sack’s take on the study. Not a word from him.
Apologies for this off-topic rant but I am really concerned how my country is spending resources on AI infrastructure. I think this is a massive bubble, but I am not sure how catastrophic the bubble will be.
I think the answer to your question is ‘not for very long.’ I frequently have breakfast with a friend who is a retired math professor and he is an avid investor in the stock market. We talk a lot about how long the US stock market will keep increasing in value. We don’t know the answer about the stock market, but it is fun to talk about. We both want to start easing out of the stock market.
It's not startup success rate, it's application of the technology at companies. Meaning that 95% of the time that AI is applied to a work problem, it fails to generate material value over existing methods.
> a week before that podcast, a well known study was released that showed that 95% of new LLM/AI corporate projects were fails.
I mean. I think some of us knew this. There's a lot of issues with AI, some psychological, some are risk adverse individuals who would love to save hours, weeks, months, maybe years of time with AI, but if AI screws up, its bad, really bad, legal hell bad, unless you have a model with a 100% success rate for the task, it wont be used in certain fields.
I think in the more creative fields its very useful, since hallucinations are okay, its when you try to get realistic / look reasonably realistic (in the case of cartoons) that it gets iffy. Even so though, who wants to pay the true cost of AI? There's a big uphill cost involved.
It reminds me a lot of crypto mining, mostly because you need an insane amount to invest into before you become profitable.
Sacks has always been absolutely disingenuous and interested in pedaling his own interests over the interests of the common good. As a total Trump shill he talks out of both sides of his mouth at the same time & accuses the left of things that he has no problem with when he or his own party does it.
Anyone who's listened to him (even those who align with him politically) for an extended period of time can't help but to notice so obviously so self interested to the point of total hypocrisy—the examples of which are too many to begin to even wanting to enumerate. Like—take the Trump/Epstein stuff, or the Elon/Trump fallout—topics he would absolutely lose his sh*t over if these were characters on the left. I find it hard to believe anyone actually ever took him seriously. Branding myself as a fan of his would just be a completely self-humiliating insult to my intelligence and my conscience IMO.
They are heavy into AI investing but will tell people AI startups are just toy apps (Chamath). That podcast is full of crooks. I’d be willing to give them a pass as bunch of old white guy techies that just love to talk about tech, but they are literally at the dinner table with Trump and Musk.
This country used to have congressional hearings on all kinds of matters from baseball to the Mafia. Tech collusion and insider knowledge is not getting investigated. The All-in podcast requires serious investigation, with question #1 being “how the fuck did you guys manage to influence the White House?”.
Other notes:
- Many of them are technically illiterate
- They will speak in business talk , you won’t find a hint of intimate technical knowledge
- The more you watch it, the more you realize that money absolutely buys a seat at the table:
I was also wondering if Google would try to make profit from selling TPUs, but they probably won’t because:
At least for me, Google has some real cachet and deserves kudos for not losing money selling Gemini services, at least I think it is plausible that they are already profitable, or soon will be. In the US, I get the impression that everyone else is burning money to get market share, but if I am wrong I would enjoy seeing evidence to the contrary. I suspect that Microsoft might be doing OK because of selling access to their infrastructure (just like Google).
There's no point selling TPUs when you can bundle TPU access as part of much more profitable training services. The margins are much higher providing a service as part of GCP versus selling.
I agree. Amazon and I think Microsoft are also working on their own NVIDIA replacement chips - it will be interesting to see if any companies start selling chips, or stick with services.
From what I'm hearing in my network, the name of the game is custom chips hyperoptimized for your own workloads.
A major reason Deepseek was so successful margins wise was because the team heavily understood Nvidia, CUDA, and Linux internals.
If you have an understanding of the intricacies of your custom ASIC's architecture, it's easier for you to solve perf issues, parallelize, and debug problems.
And then you can make up the cost by selling inference as a service.
> Amazon and I think Microsoft are also working on their own NVIDIA replacement chips
Not just them. I know of at least 4-5 other similar initiatives (some public like OpenAI's, another which is being contracted by a large nation, and a couple others which haven't been announced yet so I can't divulge).
Contract ASIC and GPU design is booming, and Broadcom, Marvell, HPE, Nvidia, and others are cashing in on it.
I wouldn't be surprised if a fair portion of Amazon's Bedrock traffic is being served by Inferentia silicon. Their margins on Anthropic models are razor thin and there's a lot of traffic, so there's definitely an incentive. Additionally, every model that's served by Inferentia frees up Nvidia capacity for either models that can't be so served or for selling to customers.
That's the same as saying that Google is winning the AI race because they don't like losing. They won't win anything if we are in a bubble that burst tho
A hypothetical AI bubble bursting doesn't mean that every single AI vendor fails completely. Like the Dot-Com Bubble, the market value drops precipitously and many companies fold, but because the market value does not fall to zero, the survivors (i.e. Amazon) still win.
As long as only TMSC is only top performance chip producer and it is possible to reserve all it manufacturing capacity for one two clients the NVIDIA will hold without problem...
My opinion, the problems for NVIDIA will start when China ramp up internal chip manufacturing performance enough to be in same order of magnitude as TMSC.
> but I wonder how important performance really is here.
Perf is important, but ime American MLEs are less likely to investigate GPU and OS internals to get maximum perf, and just throw money at the problem.
> solder on a large amount of high bandwidth memory and produce these cards relatively cheaply
HBM is somewhat limited in China as well. CXMT is around 3-4 years behind other HBM vendors.
That said, you don't need the latest and most performant GPUs if you can tune older GPUs and parallelize training at a large scale.
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IMO, Model training is an embarrassingly parallel problem, and a large enough cluster leveraging 1-2 generation older architectures that is heavily tuned should be able to provide similar performance to train models.
This is why I bemoan America's failures at OS internals and systems education. You have entire generations of "ML Engineers" and researchers in the US who don't know their way around CUDA or Infiniband optimization or the ins-and-outs of the Linux kernel.
They're just boffins who like math and using wrappers.
That said, I'd be cautious to trust a press release or secondhand report from CCTV, especially after the Kirin 9000 saga and SMIC.
But arguably, it doesn't matter - even if Alibaba's system isn't comparably performant to an H20, if it can be manufactured at scale without eating Nvidia's margins, it's good enough.
> Their multiples don't seem sustainable so they are likely to fall at some point but when is tricky.
They've been trying really hard to pivot and find new growth areas. They've taken their "inflated" stock price as capital to invest in many other companies. If at least some of these bets pay off it's not so bad.
Slowing AI development by even one month is essentially infinite slowness in terms of superintelligence development. It's a kill-shot, a massive policy success.
Lost months are lost exponentially and it becomes impossible to catch up. If this policy worked at all, let alone if it worked as you describe, this was a masterstroke of foreign policy.
This isn't merely my opinion, experts in this field feel superintelligence is at least possible, if not plausible. This is a massively successful policy is true, and, if it's not, little is lost. You've made a very strong case for it.
Can someone ELI5 this to me? Nvidia has the market cap of a medium-sized country precisely because apparently (?) no one else can make chips like them. Great tech, hard to manufacture, etc - Intel and AMD are nowhere to be seen. And I can imagine it's very tricky business!
China, admittedly full of smart and hard working people, then just wakes up one day an in a few years covers the entire gap, to within some small error?
How is this consistent? Either:
- The Chinese GPUs are not that good after all
- Nvidia doesn't have any magical secret sauce, and China could easily catch up
- Nvidia IP is real but Chinese people are so smart they can overcome decades of R&D advantage in just s few years
- It's all stolen IP
To be clear, my default guess isn't that it is stolen IP, rather I can't make sense of it. NVDA is valued near infinity, then China just turns around and produces their flagship product without too much sweat..?
> because apparently (?) no one else can make chips like them
No, that's not really why. It is because nobody else has their _ecosystem_; they have a lot of soft lock-in.
This isn’t just an nvidia thing. Why was Intel so dominant for decades? Largely not due to secret magic technology, but due to _ecosystem_. A PPC601 was substantially faster than a pentium, but of little use to you if your whole ecosystem was x86, say. Now nvidia’s ecosystem advantage isn’t as strong as Intel’s was, but it’s not nothing, either.
(Eventually, even Intel itself was unable to deal with this; Itanium failed miserably, largely due not to external competition but due to competition with the x86, though it did have other issues.)
It’s also notable that nvidia’s adventures in markets where someone _else_ has the ecosystem advantage have been less successful. In particular, see their attempts to break into mobile chip land; realistically, it was easier for most OEMs just to use Qualcomm.
It’s several factors and all of your alternatives are true to some degree:
1. An h20 is about 1.5 generations behind Blackwell. This chip looks closer to about 2 generations behind top end Blackwell chips. So ~5ish years behind is not as impressive especially since EUV is likely going to be a major obstacle to catching up which China has no capacity for
2. Nvidia continues to dominate on the software side. Amd chips have been competitive on paper for a while and have had limited uptake. Now Chinese government mandates could obviously correct this after substantial investment in the software stack — but this is probably several years behind.
3. China has poured trillions of dollars into its academic system and graduates more than 3x the number of electrical engineers the US does. The US immigration system has also been training Chinese students but having a much more limited work visa program has transferred a lot of knowledge back without even touching IP issues
The article seems to only depict it being similar to the H20 in memory specs (and still a bit short). Regardless, Nvidia has their moat through cuda, not the hardware.
I'd say there's a mix of 'Chinese GPUs are not that good after all' and 'Nvidia doesn't have any magical secret sauce, and China could easily catch up' going on. Nvidia GPUs are indeed remarkable devices with a complex software stack that offers all kinds of possibilities that you cannot replicate over night (or over a year or two!)
However they've also got a fair amount of generality, anything you might want to do that involves huge amounts of matmuls and vector maths you can probably map to a GPU and do a half decent job of it. This is good for things like model research and exploration of training methods.
Once this is all developed you can cherry pick a few specific things to be good at and build your own GPU concentrating on making those specific things work well (such as inference and training on Transformer architectures) and catch up to Nvidia on those aspects even if you cannot beat or match a GPU on every possible task, however you don't care as you only want to do some specific things well.
This is still hard and model architectures and training approaches are continuously evolving. Simplify things too much and target some ultra specific things and you end up with some pretty useless hardware that won't allow you to develop next year's models, nor run this year's particularly well. You can just develop and run last year's models. So you need to hit a sweet spot between enough flexibility to keep up with developments but don't add so much you have to totally replicate what Nvidia have done.
Ultimately the 'secret sauce' is just years of development producing a very capable architecture that offers huge flexibility across differing workloads. You can short-cut that development by reducing flexibility or not caring your architecture is rubbish at certain things (hence no magical secret sauce). This is still hard and your first gen could suck quite a lot (hence not that good after all) but when you've got a strong desire for an alternative hardware source you can probably put up with a lot of short-term pain for the long-term pay off.
What does "are not good after all" even mean? I feel there are too many value judgements in that question's tone, that blindsides western observers. I feel like the tone has the hidden implication of "this must be fake after all, they're only good at faking/stealing, nothing to see here move along".
Are they as good as Nvidia? No. News reporters have a tendency to hype things up beyond reality. No surprises there.
Are they useless garbage? No.
Can the quality issues be overcome with time and R&D? Yes.
Is being "worse" a necessary interim step to become "good"? Yes.
Are they motivated to become "good"? Yes.
Do they have a market that is willing to wait for them to become "good"? Also yes. It used to be no, but the US created this market for them.
Also, comparing Chinese AI chips to Nvidia is a bit like comparing AWS with Azure. Overcoming compatibility problems is not trivial, you can't just lift and shift your workload to another public cloud, you are best off redesigning your entire infra for the capabilities of the target cloud.
I think my question made it clear I'm not simply assuming China is somehow cheating here - either in the specs of their current product, or in stealing IP.
No, I just struggle to reconcile (but many answers here go some way to clarifying) Nvidia being the pinnacle of the R&D-driven tech industry - not according to me but to global investors - and China catching up seemingly easily.
What gave you the impression that it's "without too much sweat"? They sweated insanely for the past 6 years.
They also weren't starting from scratch, they already had a domestic semiconductor ecosystem, but it was fragmented and not motivated. The US sanctions united them and gave them motivation.
Also "good" is a matter of perspective. For logic and AI chips they are not Nvidia level, yet. But they've achieved far more than what western commentators gave them credit for 4-5 years ago. And they're just getting started. Even after 6 years, what you're seeing is just the initial results of all that investment. From their perspective, not having Nvidia chips and ASML equipment and TSMC manufacturing is still painful. They're just not paralyzed, and use all that pain to keep developing.
With power chips they're competitive, maybe even ahead. They're very strong at GaN chip design and manufacturing.
Western observers keep getting surprised by China's results because they buy into stereotypes and simple stories too much ("China can't innovate and can only steal", "authoritarianism kills innovation","China is collapsing anyway", "everything is fake, they rely on smuggled chips lol" are just few popular tropes) instead of watching what China is actually doing. Anybody even casually paying attention to news and rumors from China instead of self-congratulating western reports about China could have seen this day coming. This attitude and the phenomenon of keep getting surprised is not limited to semiconductors.
They've gone all-in with using less advanced equipment (DUV instead of EUV) but advanced techniques (multi patterning). Also combined with advanced packaging techniques.
Also, they're working hard on replacing ASML DUV machines as well since the US is also sanctioning the higher end of DUV machines. Not to mention multiple parallel R&D tracks for EUV.
You also need to distinguish between design and manufacturing. A lot of Chinese chip news is about design. Lots of Chinese chip designers are not yet sanctioned, and fabricate through TSMC.
Chip design talent pool is important to have, although I find that news a bit boring. The real excitement comes from chip equipment manufacturers, and designers that have been banned from manufacturing with TSMC and need to collaborate with domestic manufacturers.
You need to see it from their perspective. "huge step behind" is better than "we have nothing, let's just die". This is the best they have right now, and they're going all in with that until R&D efforts produce something better (e.g., domestic EUV).
It could also happen that all their DUV investment allows them to discover a valuable DUV-derived tech tree branch that the west hasn't discovered yet.
Results are at least good enough that Huawei can produce 7nm-5nm-ish phones and sell them at profit.
A teardown of the latest Huawei phone revealed that the chips produced more heat than TSMC equivalent. However, Huawei worked around that by investing massively into avdanced heat dissipation technology improvements, and battery capacity improvements. Success in semiconductor products is not achieved along only a single dimension, there are multiple ways to overcome limitations.
Another perspective is that, by domestically designing and producing chips, they no longer need to pay the generous margins for foreign IP (e.g., Qualcomm licensing fees), which is a huge cost saving and is beneficial for the economics of everything.
> You need to see it from their perspective. "huge step behind" is better than "we have nothing, let's just die".
Yes but that doesn't answer the question of how they got so close to nvidia.
> It could also happen that all their DUV investment allows them to discover a valuable DUV-derived tech tree branch that the west hasn't discovered yet.
But why wouldn't the west discover that same branch but now for EUV?
> Results are at least good enough that Huawei can produce 7nm-5nm-ish phones and sell them at profit.
Sidenote, I'd love to see some photos and an analysis of the quality of their process.
Defaulting to China stealing IP is a perfectly reasonable first step.
China is known for their countless theft of Europe and especially American IP, selling it for a quarter of the price, and destroying the original company nearly overnight.
Its so bad even NASA has begun to restrict hiring Chinese nationals (which is more national defense, however illegally killing American companies can be seen as a national defense threat as well)
Why do we look at these as a race? There is nothing to win. Nobody won space, or nukes, and they won’t win AI. You might get there first, but your competitor will get there soon after regardless. Embrace it.
Considering the fact China controls most of the world supply of rare minerals, considering the fact the US is lead by a incompetent leader, considering the fact Nvidia looses a big market, I think China can compete with even the leading Nvidia chips in a couple of years time.
If that happens, China in turn can export those Chips to countries that are in dire need of Chips, like Russia. They can export to Africa, South-America and the rest of Asia. Thus resulting in more competition for Nvidia. I see bright times ahead, where the USA no longer controls all of the worlds chip supply and OS systems.
China doesn't control the supply of rare minerals but rather production. Rare minerals are not really rare, but the processing them is a "dirty" business and does lot of damage to environment.
China has managed to monopolise the production (cheap prices) and advance the refinement process, so other domestic projects to extract rare earth minerals were not really profitable. To start it again would take some time.
US government f'ed over Nvidia's China market dominance in order to help OpenAI, Google, Anthropic, xAI.
China shouldn't be buying H20s. Those are gimped 3 year old GPUs. If Nvidia is allowed to sell the latest and greatest in China, I think their revenue would jump massively.
Several years ago, whenever some Chinese engineers dared to propose using some Chinese parts, the challenges he/she had to face is always "who is going to be responsible if it is not reliable enough for its quality?"
Nowadays, whenever some Chinese engineers dared to propose using some American parts, the challenges he/she had to face is always "who is going to be responsible if it is not reliable enough for its supply?"
2. CUDA has been a huge moat, but the incentives are incredibly strong for everybody except Nvidia to change that. The fact that it was an insurmountable moat five years ago in a $5B market does not mean it’s equally powerful in a $300B market.
3. AMD’s culture and core competencies are really not aligned to playing disruptor here. Nvidia is generally more agile and more experimental. It would have taken a serious pivot years ago for AMD to be the right company to compete.
They have never had a focus on top notch software development.
It's all about investment. If you are a random company you don't want to sink millions in figuring out how to use AMD so you apply the tried an true "no one gets fired for buying Nvidia".
If you are an authoritarian state with some level of control over domestic companies, that calculus does not exist. You can just ban Nvidia chips and force to learn how to use the new thing. By using the new thing an ecosystem gets built around it.
It's the beauty of centralized controlled in the face of free markets and I don't doubt that it will pay-off for them.
Also AMD really didn't invest enough in making their software experience as nice as NVIDIA.
See, Mojo, a new language to compile to other chips. https://www.modular.com/mojo
Sure, you can keep buying nvidia, but that wasn't what was discussed.
https://www.ft.com/content/12adf92d-3e34-428a-8d61-c91695119...
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.
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.
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.
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 they quality of life is only improving there and the pace of progress hasn't slowed down
I have the feeling the US is creating giant problems by putting massive tariffs on allies and pretending they don't hurt themselves.
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.
China has built a successful tech pipeline, but it doesn't translate to significant prosperity in a country where median disposable 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+...
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.
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...
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).
Have you been living under a rock the past couple of years?
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.
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.
Looking at the Chinese semiconductor development trajectory, and considering that TSMC won't be sitting on their hands, "within a decade" seems really unlikely.
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.
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.
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.
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.
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.
And NVIDIA will lose its dominance for the simple reason that the Chinese companies can serve the growing number of countries under US sanctions. I even suspect it won't be long before the US will try to sanction any allies that buy Chinese AI chips!
Simple example being TikTok.
Its just a matter of time really.
They are vendor locking industries, i don't think they'll loose their dominance, however, vendor locked companies will loose their competitiveness
It was also frustratingly predictable from the moment the US started trying to limit the sales of the chips. America has slowed the speed of Chinese AI development by a tiny number of years, if that, in return for losing total domination of the GPU market.
I'm open to considering the argument that banning exports of a thing creates a market incentive for the people impacted by the ban to build aa better and cheaper thing themselves, but I don't think it's as black and white as you say.
If the only ingredient needed to support massive innovation and cost cutting is banning exports, wouldn't we have tons of examples of that happening already - like in Russia or Korea or Cuba? Additionally, even if the sale of NVIDIA H100s weren't banned in China, doesn't China already have a massive incentive to throw resources behind creating competitive chips?
I actually don't really like export bans, generally, and certainly not long-term ones. But I think you (and many other people in the public) are overstating the direct connection between banning exports of a thing and the affected country generating a competing or better product quickly.
That's just one of the ingredients that could help with chance of it happening, far from being "the only ingredient".
The other (imo even more crucial) ingredients are the actual engineering/research+economical+industrial production capabilities. And it just so happens that none of the countries you listed (Russia, DPRK, and Cuba) have that. That's not a dig at you, it is just really rare in general for a country to have all of those things available in place, and especially for an authoritarian country. Ironically, it feels like being an authoritarian country makes it more difficult to have all those pieces together, but if such a country already has those pieces, then being authoritarian imo only helps (as you can just employ the "shove it down everyone's throat until it reaches critical mass, improves, and succeeds" strategy).
However, it is important to remember that even with all those ingredients available on hand, all it means is that you have a non-zero chance at succeeding, not a guarantee of that happening.
South Korea might have the capability to play this game (North Korea certainly doesn't), but it hasn't really had the incentive to.
Which brings us to the real issue: an export ban on an important product creates an extremely strong incentive, that didn't exist before. Throwing significant national resources at a problem to speculatively improve a country's competitiveness is a very different calculation than doing so when there's very little alternative.
That’s not to say I’m brave enough to short NVDA.
I am a long time fan of Dave Sacks and the All In podcast ‘besties’ but now that he is ‘AI czar’ for our government it is interesting what he does not talk about. For example on a recent podcast he was pumping up AI as a long term solution to US economic woes, but a week before that podcast, a well known study was released that showed that 95% of new LLM/AI corporate projects were fails. Another thing that he swept under the rug was the recent Stanford study that 80% of US startups are saving money using less expensive Chinese (and Mistral, and Google Gemma??) models. When the Stanford study was released, I watched All In material for a few weeks, expecting David Sack’s take on the study. Not a word from him.
Apologies for this off-topic rant but I am really concerned how my country is spending resources on AI infrastructure. I think this is a massive bubble, but I am not sure how catastrophic the bubble will be.
The US is burning good will at an alarming rate, how long will countries keep paying a premium to be spied on by the US instead of China?
I mean. I think some of us knew this. There's a lot of issues with AI, some psychological, some are risk adverse individuals who would love to save hours, weeks, months, maybe years of time with AI, but if AI screws up, its bad, really bad, legal hell bad, unless you have a model with a 100% success rate for the task, it wont be used in certain fields.
I think in the more creative fields its very useful, since hallucinations are okay, its when you try to get realistic / look reasonably realistic (in the case of cartoons) that it gets iffy. Even so though, who wants to pay the true cost of AI? There's a big uphill cost involved.
It reminds me a lot of crypto mining, mostly because you need an insane amount to invest into before you become profitable.
Anyone who's listened to him (even those who align with him politically) for an extended period of time can't help but to notice so obviously so self interested to the point of total hypocrisy—the examples of which are too many to begin to even wanting to enumerate. Like—take the Trump/Epstein stuff, or the Elon/Trump fallout—topics he would absolutely lose his sh*t over if these were characters on the left. I find it hard to believe anyone actually ever took him seriously. Branding myself as a fan of his would just be a completely self-humiliating insult to my intelligence and my conscience IMO.
This country used to have congressional hearings on all kinds of matters from baseball to the Mafia. Tech collusion and insider knowledge is not getting investigated. The All-in podcast requires serious investigation, with question #1 being “how the fuck did you guys manage to influence the White House?”.
Other notes:
- Many of them are technically illiterate
- They will speak in business talk , you won’t find a hint of intimate technical knowledge
- The more you watch it, the more you realize that money absolutely buys a seat at the table:
https://bloximages.chicago2.vip.townnews.com/goskagit.com/co...
(^ Saved myself another thousand words)
At least for me, Google has some real cachet and deserves kudos for not losing money selling Gemini services, at least I think it is plausible that they are already profitable, or soon will be. In the US, I get the impression that everyone else is burning money to get market share, but if I am wrong I would enjoy seeing evidence to the contrary. I suspect that Microsoft might be doing OK because of selling access to their infrastructure (just like Google).
A major reason Deepseek was so successful margins wise was because the team heavily understood Nvidia, CUDA, and Linux internals.
If you have an understanding of the intricacies of your custom ASIC's architecture, it's easier for you to solve perf issues, parallelize, and debug problems.
And then you can make up the cost by selling inference as a service.
> Amazon and I think Microsoft are also working on their own NVIDIA replacement chips
Not just them. I know of at least 4-5 other similar initiatives (some public like OpenAI's, another which is being contracted by a large nation, and a couple others which haven't been announced yet so I can't divulge).
Contract ASIC and GPU design is booming, and Broadcom, Marvell, HPE, Nvidia, and others are cashing in on it.
A long time ago I worked as a contractor at Google, and that experience taught me that they don’t like things that don’t scale or are inefficient.
My opinion, the problems for NVIDIA will start when China ramp up internal chip manufacturing performance enough to be in same order of magnitude as TMSC.
Cerebras get their chipped fabbed by them. I assume Eucyld will have their chips fabbed by them.
If there's orders, why would they prefer NVIDIA? Customer diversity is good, is it not?
Money talks. Apple asked for first dips a while earlier (exclusively).
Wont it be enough to just solder on a large amount of high bandwidth memory and produce these cards relatively cheaply?
Perf is important, but ime American MLEs are less likely to investigate GPU and OS internals to get maximum perf, and just throw money at the problem.
> solder on a large amount of high bandwidth memory and produce these cards relatively cheaply
HBM is somewhat limited in China as well. CXMT is around 3-4 years behind other HBM vendors.
That said, you don't need the latest and most performant GPUs if you can tune older GPUs and parallelize training at a large scale.
-----------
IMO, Model training is an embarrassingly parallel problem, and a large enough cluster leveraging 1-2 generation older architectures that is heavily tuned should be able to provide similar performance to train models.
This is why I bemoan America's failures at OS internals and systems education. You have entire generations of "ML Engineers" and researchers in the US who don't know their way around CUDA or Infiniband optimization or the ins-and-outs of the Linux kernel.
They're just boffins who like math and using wrappers.
That said, I'd be cautious to trust a press release or secondhand report from CCTV, especially after the Kirin 9000 saga and SMIC.
But arguably, it doesn't matter - even if Alibaba's system isn't comparably performant to an H20, if it can be manufactured at scale without eating Nvidia's margins, it's good enough.
Their multiples don't seem sustainable so they are likely to fall at some point but when is tricky.
They've been trying really hard to pivot and find new growth areas. They've taken their "inflated" stock price as capital to invest in many other companies. If at least some of these bets pay off it's not so bad.
Lost months are lost exponentially and it becomes impossible to catch up. If this policy worked at all, let alone if it worked as you describe, this was a masterstroke of foreign policy.
This isn't merely my opinion, experts in this field feel superintelligence is at least possible, if not plausible. This is a massively successful policy is true, and, if it's not, little is lost. You've made a very strong case for it.
doing a lot of heavy lifting in your conjecture
China, admittedly full of smart and hard working people, then just wakes up one day an in a few years covers the entire gap, to within some small error?
How is this consistent? Either:
- The Chinese GPUs are not that good after all
- Nvidia doesn't have any magical secret sauce, and China could easily catch up
- Nvidia IP is real but Chinese people are so smart they can overcome decades of R&D advantage in just s few years
- It's all stolen IP
To be clear, my default guess isn't that it is stolen IP, rather I can't make sense of it. NVDA is valued near infinity, then China just turns around and produces their flagship product without too much sweat..?
No, that's not really why. It is because nobody else has their _ecosystem_; they have a lot of soft lock-in.
This isn’t just an nvidia thing. Why was Intel so dominant for decades? Largely not due to secret magic technology, but due to _ecosystem_. A PPC601 was substantially faster than a pentium, but of little use to you if your whole ecosystem was x86, say. Now nvidia’s ecosystem advantage isn’t as strong as Intel’s was, but it’s not nothing, either.
(Eventually, even Intel itself was unable to deal with this; Itanium failed miserably, largely due not to external competition but due to competition with the x86, though it did have other issues.)
It’s also notable that nvidia’s adventures in markets where someone _else_ has the ecosystem advantage have been less successful. In particular, see their attempts to break into mobile chip land; realistically, it was easier for most OEMs just to use Qualcomm.
1. An h20 is about 1.5 generations behind Blackwell. This chip looks closer to about 2 generations behind top end Blackwell chips. So ~5ish years behind is not as impressive especially since EUV is likely going to be a major obstacle to catching up which China has no capacity for
2. Nvidia continues to dominate on the software side. Amd chips have been competitive on paper for a while and have had limited uptake. Now Chinese government mandates could obviously correct this after substantial investment in the software stack — but this is probably several years behind.
3. China has poured trillions of dollars into its academic system and graduates more than 3x the number of electrical engineers the US does. The US immigration system has also been training Chinese students but having a much more limited work visa program has transferred a lot of knowledge back without even touching IP issues
4. Of course ip theft covers some of it
However they've also got a fair amount of generality, anything you might want to do that involves huge amounts of matmuls and vector maths you can probably map to a GPU and do a half decent job of it. This is good for things like model research and exploration of training methods.
Once this is all developed you can cherry pick a few specific things to be good at and build your own GPU concentrating on making those specific things work well (such as inference and training on Transformer architectures) and catch up to Nvidia on those aspects even if you cannot beat or match a GPU on every possible task, however you don't care as you only want to do some specific things well.
This is still hard and model architectures and training approaches are continuously evolving. Simplify things too much and target some ultra specific things and you end up with some pretty useless hardware that won't allow you to develop next year's models, nor run this year's particularly well. You can just develop and run last year's models. So you need to hit a sweet spot between enough flexibility to keep up with developments but don't add so much you have to totally replicate what Nvidia have done.
Ultimately the 'secret sauce' is just years of development producing a very capable architecture that offers huge flexibility across differing workloads. You can short-cut that development by reducing flexibility or not caring your architecture is rubbish at certain things (hence no magical secret sauce). This is still hard and your first gen could suck quite a lot (hence not that good after all) but when you've got a strong desire for an alternative hardware source you can probably put up with a lot of short-term pain for the long-term pay off.
Are they as good as Nvidia? No. News reporters have a tendency to hype things up beyond reality. No surprises there.
Are they useless garbage? No.
Can the quality issues be overcome with time and R&D? Yes.
Is being "worse" a necessary interim step to become "good"? Yes.
Are they motivated to become "good"? Yes.
Do they have a market that is willing to wait for them to become "good"? Also yes. It used to be no, but the US created this market for them.
Also, comparing Chinese AI chips to Nvidia is a bit like comparing AWS with Azure. Overcoming compatibility problems is not trivial, you can't just lift and shift your workload to another public cloud, you are best off redesigning your entire infra for the capabilities of the target cloud.
No, I just struggle to reconcile (but many answers here go some way to clarifying) Nvidia being the pinnacle of the R&D-driven tech industry - not according to me but to global investors - and China catching up seemingly easily.
This is the simple explanation. We'll also see European companies matching them in time, probably on inference first.
They also weren't starting from scratch, they already had a domestic semiconductor ecosystem, but it was fragmented and not motivated. The US sanctions united them and gave them motivation.
Also "good" is a matter of perspective. For logic and AI chips they are not Nvidia level, yet. But they've achieved far more than what western commentators gave them credit for 4-5 years ago. And they're just getting started. Even after 6 years, what you're seeing is just the initial results of all that investment. From their perspective, not having Nvidia chips and ASML equipment and TSMC manufacturing is still painful. They're just not paralyzed, and use all that pain to keep developing.
With power chips they're competitive, maybe even ahead. They're very strong at GaN chip design and manufacturing.
Western observers keep getting surprised by China's results because they buy into stereotypes and simple stories too much ("China can't innovate and can only steal", "authoritarianism kills innovation","China is collapsing anyway", "everything is fake, they rely on smuggled chips lol" are just few popular tropes) instead of watching what China is actually doing. Anybody even casually paying attention to news and rumors from China instead of self-congratulating western reports about China could have seen this day coming. This attitude and the phenomenon of keep getting surprised is not limited to semiconductors.
https://www.theguardian.com/technology/2024/jan/02/asml-halt...
Also, they're working hard on replacing ASML DUV machines as well since the US is also sanctioning the higher end of DUV machines. Not to mention multiple parallel R&D tracks for EUV.
You also need to distinguish between design and manufacturing. A lot of Chinese chip news is about design. Lots of Chinese chip designers are not yet sanctioned, and fabricate through TSMC.
Chip design talent pool is important to have, although I find that news a bit boring. The real excitement comes from chip equipment manufacturers, and designers that have been banned from manufacturing with TSMC and need to collaborate with domestic manufacturers.
But that still seems like a huge step behind using EUV + advanced techniques.
Anyway, I'm curious to know how far that gets them in terms of #transistors per square mm.
Also, do we know there aren't secret contracts with TSMC?
It could also happen that all their DUV investment allows them to discover a valuable DUV-derived tech tree branch that the west hasn't discovered yet.
Results are at least good enough that Huawei can produce 7nm-5nm-ish phones and sell them at profit.
A teardown of the latest Huawei phone revealed that the chips produced more heat than TSMC equivalent. However, Huawei worked around that by investing massively into avdanced heat dissipation technology improvements, and battery capacity improvements. Success in semiconductor products is not achieved along only a single dimension, there are multiple ways to overcome limitations.
Another perspective is that, by domestically designing and producing chips, they no longer need to pay the generous margins for foreign IP (e.g., Qualcomm licensing fees), which is a huge cost saving and is beneficial for the economics of everything.
Yes but that doesn't answer the question of how they got so close to nvidia.
> It could also happen that all their DUV investment allows them to discover a valuable DUV-derived tech tree branch that the west hasn't discovered yet.
But why wouldn't the west discover that same branch but now for EUV?
> Results are at least good enough that Huawei can produce 7nm-5nm-ish phones and sell them at profit.
Sidenote, I'd love to see some photos and an analysis of the quality of their process.
China is known for their countless theft of Europe and especially American IP, selling it for a quarter of the price, and destroying the original company nearly overnight.
Its so bad even NASA has begun to restrict hiring Chinese nationals (which is more national defense, however illegally killing American companies can be seen as a national defense threat as well)
https://www.bbc.com/news/articles/c9wd5qpekkvo.amp
https://www.csis.org/analysis/how-chinese-communist-party-us...
But them, they do not think the same.
If that happens, China in turn can export those Chips to countries that are in dire need of Chips, like Russia. They can export to Africa, South-America and the rest of Asia. Thus resulting in more competition for Nvidia. I see bright times ahead, where the USA no longer controls all of the worlds chip supply and OS systems.
I see this as an absolute win.
China has managed to monopolise the production (cheap prices) and advance the refinement process, so other domestic projects to extract rare earth minerals were not really profitable. To start it again would take some time.
https://news.ycombinator.com/item?id=45275070
China shouldn't be buying H20s. Those are gimped 3 year old GPUs. If Nvidia is allowed to sell the latest and greatest in China, I think their revenue would jump massively.
I believe about 1000 S&P points down - to just above the trade war lows from April.
Nowadays, whenever some Chinese engineers dared to propose using some American parts, the challenges he/she had to face is always "who is going to be responsible if it is not reliable enough for its supply?"