Ramping up its chip industry is a way for Beijing to beat restrictions imposed by Washington on exports of the most advanced chips — used to power AI systems — to China (STR) <\/p>\n
China’s push to develop top-end artificial intelligence microchips is gaining momentum, but analysts say it will struggle to match the technical might of US powerhouse Nvidia within the current decade.<\/p>\n
Ramping up its chip industry is a way for Beijing to beat restrictions imposed by Washington on exports of the most advanced chips — used to power AI systems — to China.<\/p>\n
The United States cites national security concerns, such as the risk of giving China a military advantage, for the block, a geopolitical bind that shows no sign of easing.<\/p>\n
“China wants chips that policy cannot take away,” said Stephen Wu, a former AI software engineer and founder of the Carthage Capital investment fund.<\/p>\n
However, “full end-to-end parity with Nvidia’s best chips, memory packaging, networking and software is not guaranteed” by 2030 or even beyond, Wu told AFP.<\/p>\n
Announcements of computing upgrades by Chinese companies and reports of plans to dramatically increase output of advanced semiconductors have driven up chip-related shares in the country.<\/p>\n
But to catch up with Nvidia, China needs to make fast progress on high-bandwidth memory and packaging — “the hardest and most complex parts of the chip”, Wu said.<\/p>\n
Other challenges include building the right software to harness the chips’ power, and upgrading manufacturing tools.<\/p>\n
“These chips are extremely advanced and tiny, so imagine carving a stone sculpture with a hammer instead of a chisel,” Wu said.<\/p>\n
– ‘Only way’ to succeed –<\/p>\n
“The industry consensus is China at least needs five to ten years to catch up,” said George Chen of The Asia Group, a view reflected by Dilin Wu, research strategist at Pepperstone.<\/p>\n
“The future is bright, but not yet,” she told AFP.<\/p>\n
“It’s maybe a 2030 story”, as “significant gaps remain in terms of performance, and also in terms of energy efficiency and ecosystem maturity”.<\/p>\n
Public demand for AI services is booming in China, and while government support for new chips is “substantial”, the investment required is “immense”, she added.<\/p>\n
Shares in Alibaba, the e-commerce titan ploughing billions of dollars into AI tech, have more than doubled since January.<\/p>\n
And Chinese chip industry leader Huawei will reportedly double output of its top Ascend 910C chip in the next year.<\/p>\n
The hype has also sharply driven up stocks in the smaller chipmaker Cambricon, sometimes dubbed “China’s Nvidia”.<\/p>\n
“I think this rally can be sustained”, partly because it is driven by Chinese government policy, Pepperstone’s Wu said.<\/p>\n
Even Xiaomi, whose 2014 venture into chip design was a self-confessed flop, is turning back to semiconductors.<\/p>\n
“Chips are the only way for Xiaomi to succeed,” the company’s CEO Lei Jun said in Beijing last month, referring to the production of high-end smartphone chips.<\/p>\n
– ‘Best in China’ –<\/p>\n
China, the world’s biggest consumer of semiconductors, is a huge market for California-based Nvidia.<\/p>\n
Nvidia chips are still “the best… to train large language models”, the systems behind generative AI, said Chen Cheng, general manager for AI translation software at tech firm iFLYTEK.<\/p>\n
Faced with US restrictions, “we overcame that difficulty” by shifting to Chinese-made tech, she said in a group interview.<\/p>\n
“Now our model is trained on Huawei chips” — currently the best in China, Cheng said.<\/p>\n
Meanwhile Nvidia, the world’s largest company by market capitalisation, is under pressure from both sides.<\/p>\n
The Financial Times reported last month that Beijing had barred major Chinese firms from buying a state-of-the-art Nvidia processor made especially for the country.<\/p>\n
And the company must now pay the US government 15 percent of revenue from certain AI chip sales in China.<\/p>\n
Nvidia boss Jensen Huang has warned that restrictions on exporting his most cutting-edge semiconductors to China will only fuel the country’s rise.<\/p>\n
“They’re nanoseconds behind us,” the leather jacket-clad Huang said on a tech business podcast.<\/p>\n
“So we’ve got to go compete.”<\/p>\n
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