Technology

The U.S. export control response to Chinese semiconductor ambitions began in earnest with the addition of Huawei to the Commerce Department's Entity List in May 2019. The designation required U.S. suppliers to obtain licenses — effectively denied — before selling components, software, or technology to Huawei. A subsequent rule extending the restriction to foreign-made products incorporating U.S. technology cut off Huawei's access to TSMC-manufactured chips designed with U.S. electronic design automation software.

The October 2022 semiconductor export controls represented a significant expansion of the architecture. The rules imposed new restrictions on the export of advanced logic chips (at or below 16nm finFET), advanced memory chips (128-layer NAND and above, 18nm DRAM and above), and the semiconductor manufacturing equipment needed to produce them. The rules also imposed foreign direct product rules requiring non-U.S. companies using U.S. technology to obtain licenses before supplying restricted items to Chinese customers.

Subsequent updates in October 2023 and 2024 tightened the controls further, closing loopholes that had allowed the export of chips slightly below the original performance thresholds, extending restrictions to additional countries of concern, and adding new Chinese semiconductor companies to the Entity List. The controls have been coordinated — imperfectly — with allied governments, with the Netherlands restricting ASML's export of deep ultraviolet lithography equipment and Japan imposing controls on 23 categories of semiconductor manufacturing equipment.

In August 2023, Huawei released the Mate 60 Pro smartphone containing a 7nm chip — the Kirin 9000s — manufactured by SMIC, China's largest semiconductor foundry. The chip's existence demonstrated that SMIC had achieved 7nm production capability despite being on the Entity List and without access to ASML's extreme ultraviolet lithography equipment. The achievement was accomplished using older deep ultraviolet equipment in a multi-patterning process that is slower, more expensive, and lower-yield than EUV-based production.

The Kirin 9000s was a significant symbolic and technical achievement, but its implications for the export control regime are contested. The chip performs at roughly the level of a 2019-era leading-edge chip — competitive for smartphone applications but substantially behind the current frontier. SMIC's production capacity at 7nm is estimated to be limited, and the multi-patterning process makes high-volume production of advanced chips economically challenging without EUV access.

Huawei has continued to invest in its semiconductor design subsidiary HiSilicon and in the broader Chinese semiconductor ecosystem. Its AI chip division has developed the Ascend series of AI accelerators, which compete in the Chinese market with Nvidia's restricted H100 and A100 GPUs. The Ascend 910B, released in 2023, has been assessed by analysts as approaching the performance of Nvidia's A100 — the chip whose export to China was restricted in 2022 — though with lower memory bandwidth and software ecosystem maturity.

Semiconductor Manufacturing International Corporation (SMIC) is China's leading logic foundry and the primary vehicle for Chinese ambitions in advanced chip manufacturing. SMIC has received substantial state investment through the National Integrated Circuit Industry Investment Fund — known as the 'Big Fund' — and has expanded capacity significantly since being added to the Entity List in 2020. Its leading-edge capability is currently assessed at 7nm using multi-patterning DUV, with 5nm development ongoing.

In memory semiconductors, ChangXin Memory Technologies (CXMT) has made significant progress in DRAM production, reaching 17nm production capability and announcing plans for 13nm development. Yangtze Memory Technologies Corporation (YMTC) achieved 232-layer NAND flash production before being added to the Entity List in December 2022. YMTC's addition to the list cut off its access to U.S. equipment and software, significantly constraining its ability to advance to the next generation of 3D NAND architecture.

China's domestic semiconductor equipment industry — Naura Technology, AMEC, and others — has made progress in certain equipment categories, particularly etch and deposition tools. But the most critical bottleneck remains lithography. No Chinese company has demonstrated the capability to produce EUV lithography equipment, and the multi-patterning DUV approach that SMIC has used to reach 7nm becomes progressively more difficult and expensive at smaller nodes. The lithography gap is assessed as the most durable constraint on Chinese advanced chip production.

China is the world's second-largest AI market by investment and has produced globally competitive large language models, computer vision systems, and autonomous vehicle AI. Baidu's ERNIE Bot, Alibaba's Tongyi Qianwen, and a range of smaller Chinese AI companies have developed foundation models that perform competitively with Western counterparts on Chinese-language benchmarks. DeepSeek's R1 model, released in January 2025, demonstrated performance approaching OpenAI's o1 on reasoning benchmarks at significantly lower reported training cost, generating substantial attention in the U.S. AI community.

China's Military-Civil Fusion strategy explicitly directs that civilian AI development serve military modernization objectives. The People's Liberation Army has invested heavily in AI applications for intelligence analysis, autonomous systems, electronic warfare, and command-and-control. The dual-use nature of AI technology — the same foundation model capabilities that power consumer applications can be applied to military targeting, surveillance, and autonomous weapons — makes the technology competition in AI qualitatively different from earlier technology competitions.

The export controls on advanced AI chips — Nvidia's H100, A100, and their successors — have constrained Chinese AI developers' access to the highest-performance training hardware. Chinese AI companies have responded by stockpiling chips before controls took effect, using cloud computing resources in third countries, and developing domestic alternatives. The controls have imposed real costs and delays but have not halted Chinese AI development. The fundamental question — whether the controls can maintain a meaningful capability gap over a multi-year horizon — remains unresolved.

Huawei and ZTE together supplied a significant share of global 5G telecommunications infrastructure before U.S. and allied restrictions began to reshape the market. The FCC designated both companies as national security threats in 2020 and prohibited the use of federal funds to purchase their equipment. The Secure and Trusted Communications Networks Reimbursement Program — the 'rip and replace' program — allocated $1.9 billion to reimburse U.S. carriers for removing Huawei and ZTE equipment, though the program has been significantly underfunded relative to the estimated cost of full removal.

Allied governments have taken varying approaches to Huawei 5G exclusion. The United Kingdom, Australia, Sweden, and several other countries have banned or significantly restricted Huawei from core 5G network components. Germany, after extended debate, announced restrictions in 2024 requiring the removal of Huawei components from core network infrastructure by 2026 and from access networks by 2029. Several countries in Southeast Asia, Africa, and Latin America have continued to deploy Huawei 5G infrastructure, creating a bifurcated global telecommunications architecture.

The Open RAN initiative — which promotes interoperable, software-defined radio access network architecture as an alternative to proprietary Huawei and ZTE systems — has received U.S. government support as a competitive alternative. Progress has been slower than advocates projected, with interoperability challenges and higher costs relative to integrated Huawei systems limiting adoption. Ericsson and Nokia, the primary Western alternatives, have maintained market position but have not fully replaced Huawei's cost and feature advantages in price-sensitive markets.

Technology standards — the technical specifications that determine how systems interoperate — are a less visible but strategically significant dimension of the U.S.-China technology competition. Chinese companies and government-linked entities have increased their participation in international standards bodies, including the International Telecommunication Union, the International Organization for Standardization, and the 3rd Generation Partnership Project. Chinese proposals for 6G standards, facial recognition standards, and smart city infrastructure standards have drawn scrutiny from U.S. and allied governments concerned about embedding Chinese technical approaches — and potential surveillance capabilities — into global infrastructure.

The platform competition is similarly consequential. TikTok's presence in the United States — and the legislative effort to force its divestiture from ByteDance — represents the most visible instance of a broader question about Chinese-owned platforms that collect data on American users, operate under Chinese law, and are subject to Chinese government direction. The Supreme Court upheld the divestiture law in January 2025; ByteDance has contested the divestiture timeline and terms.

The technology competition between the United States and China is not primarily a competition between two governments. It is a competition between two innovation ecosystems — one characterized by private capital, academic openness, and market-driven development; the other by state direction, industrial policy, and a willingness to sustain losses over long time horizons to achieve strategic objectives. The outcome will be determined by which system produces better technology faster, and by whether the United States can maintain the export control architecture long enough for domestic investment to close the gaps the controls are designed to protect.