EconoScope | U.S. firms feel the fallout from sanctions on China
(ECNS) -- NVIDIA CEO Jensen Huang said in a recent interview that the company's share of China's high-end chip market has fallen from 95 percent to zero, underscoring the growing cost U.S. companies face under Washington's sanctions policy.
These policies have caused the country to lose one of the largest markets in the world, Huang remarked.
China's computing power landscape is undergoing a structural transformation. The ‘NVIDIA-dependent era' has ended, giving way to a diversified ecosystem led by domestic players, said Liu Dian, associate researcher at the China Institute of Fudan University, in an interview with China News Network.
Liu said three major shifts are reshaping the landscape. First, China is restructuring its supply chain as domestic chipmakers emerge as key alternatives and more semiconductor firms gain ground. Second, the country is overhauling its architecture systems, with leading internet and cloud service companies reconfiguring their AI infrastructure and adapting training frameworks and compilers to build independent technology stacks.
Finally, Chinese firms are adopting a "good enough" computing power strategy through large-scale deployment, software optimization, and task diversification to meet most commercial and industrial application needs.
Liu added that China's computing power system is evolving across the entire chain — from chip design and manufacturing to frameworks and applications — and is shifting from a follower to an independent innovator.
Behind this evolution lies China's strong talent base and solid scientific research foundation.
Huang acknowledged that the country is home to roughly half of the world's AI researchers, with top universities for artificial intelligence.
China is also leveraging its institutional strengths to advance computing network infrastructure. Through its "AI +" initiative, it is promoting a virtuous cycle where innovation drives application, and application fuels further innovation, which is supported by a complete industrial system, massive market scale, and rich application scenarios.
As the global wave of digitalization surges, the competition in AI extends beyond computing power to the sustainability of ecosystems and realization of applications. China is expanding AI integration across manufacturing, energy, transportation, and urban governance, forging a path that combines technological depth with industrial resilience.
In fact, the real cost of the U.S. chip blockade is now being borne by American companies themselves. NVIDIA's loss of its 95% share in China's market was not due to competition, but policy restrictions. In response to U.S. export controls, NVIDIA developed the China-specific H20 chip, but Washington later indefinitely blocked it on national security grounds. With these erratic policy shifts, NVIDIA gradually lost access to the Chinese market.
According to NVIDIA's latest financial report, the company did not sell any H20 products to Chinese clients in the second quarter and excluded related revenue from its third-quarter outlook.
Liu emphasized that while the controls have temporarily limited China's access to top-tier GPUs (Graphics processing units), they have also deprived U.S. firms of their largest growth market and valuable data feedback loops, further undermining innovation momentum in next-generation products.
Technological innovation is not a zero-sum game, and advances made by either China or the U.S. should not be viewed as threats, but as opportunities for cooperation.
Once a latecomer, China has now established a full-stack AI industry spanning infrastructure, frameworks, models, and applications, gaining confidence and control over the rhythm of technological innovation.
By allowing politics to override technology, the U.S. may have closed not its rival's door, but its own window to the future.
(By Gong Weiwei)