Huawei Thanks U.S. for Chip Curbs, Says it Accelerated China’s Semiconductor Rise

Pressure from Washington’s technology restrictions has become an unexpected catalyst for China’s semiconductor ambitions, according to Huawei’s Rotating Chairman and Deputy Chairman, Xu Zhijun, who said U.S. sanctions forced Chinese companies to innovate faster and strengthen domestic chipmaking capabilities.

Speaking in an interview, Xu said Huawei’s development of its LogicFolding chip architecture and other semiconductor breakthroughs emerged largely because Chinese companies were left with few alternatives after years of escalating U.S. export controls.

“If the United States hadn’t forced our country, our companies, and our industry, we wouldn’t have done something like this,” Xu said. “But we are also grateful to the U.S. for enabling our country’s semiconductor industry chain to truly grow. Now the momentum is very good, and everyone recognizes and supports it.”

While Washington’s export restrictions have slowed China’s access to cutting-edge chips and manufacturing technologies, they have also accelerated Beijing’s determination to build a self-sufficient semiconductor ecosystem.

Huawei has become one of the clearest examples of that transformation. The company was among the first major Chinese technology firms targeted by U.S. sanctions during President Donald Trump’s first administration in 2019. Restrictions cut Huawei off from critical American technologies and severely disrupted its smartphone and telecommunications businesses.

The pressure intensified in 2022 when the Biden administration imposed sweeping controls on advanced AI chips, preventing Chinese firms from purchasing products such as Nvidia’s A100 and H100 accelerators and AMD’s Instinct MI-series processors.

Subsequent tightening of restrictions under Trump’s second administration further limited access to advanced AI hardware, forcing companies across China to rethink their technology strategies.

What initially appeared to be a major setback for China’s AI ambitions has gradually evolved into a powerful incentive for domestic innovation.

Unable to freely purchase Nvidia and AMD’s most advanced processors, Chinese technology companies shifted spending toward local suppliers. The result has been a surge in investment across China’s semiconductor value chain, from chip design and packaging to manufacturing equipment and software.

Huawei has emerged at the center of that effort.

The company has invested heavily in developing its Ascend AI processor family and related infrastructure technologies aimed at reducing China’s dependence on foreign suppliers. While Chinese chips generally remain less power-efficient than leading U.S. products, the performance gap has narrowed significantly over the past several years.

Industry analysts note that sanctions created a protected domestic market that allowed Chinese semiconductor firms to scale more rapidly than they otherwise might have.

Instead of competing directly against Nvidia’s dominant position, local suppliers suddenly found themselves serving a vast customer base with limited alternatives.

The shift was boosted by Beijing’s broader industrial policy. Chinese authorities have made semiconductor self-sufficiency a national strategic priority, directing state support toward domestic chipmakers and encouraging technology companies to reduce dependence on foreign hardware. In some cases, firms have reportedly been instructed to prioritize locally produced processors even when foreign alternatives offer superior performance.

The government’s efforts extend beyond incentives. Chinese customs authorities have increasingly scrutinized imports of advanced AI hardware, reflecting Beijing’s determination to build a technology stack that is less vulnerable to foreign restrictions.

The policy appears to be reshaping the competitive landscape.

Nvidia Chief Executive Jensen Huang has repeatedly warned that export controls could ultimately strengthen Chinese competitors by creating incentives for local innovation. Huang has argued that limiting access to American technology does not eliminate demand for AI computing power; it merely redirects investment toward domestic alternatives.

Those warnings are beginning to look increasingly prescient. Nvidia once controlled roughly 95% of China’s AI accelerator market. Today, according to Huang, that share has effectively fallen to zero as restrictions and Chinese industrial policies reshape purchasing decisions.

Yet China’s AI industry continues to advance.

Chinese firms have continued releasing sophisticated AI models while expanding investments in domestic computing infrastructure. Companies such as Huawei, along with a growing network of chip designers and system developers, have benefited from a wave of capital spending aimed at creating alternatives to American technology.

The emergence of Huawei’s LogicFolding architecture illustrates how these pressures are driving experimentation. While details of the technology remain limited, the development reflects a broader trend of Chinese companies pursuing novel approaches to overcome constraints imposed by export controls.

The situation has put Washington in a dilemma. Export restrictions succeeded in delaying China’s access to leading-edge semiconductor technologies and likely slowed the country’s AI progress by several years. However, those same restrictions may also have accelerated the development of a domestic semiconductor ecosystem that is becoming increasingly capable of standing on its own.

The outcome is not yet clear. China still faces major challenges in advanced chip manufacturing, particularly in accessing the most sophisticated lithography equipment and production technologies. Domestic chips generally trail leading American products in efficiency, performance, and manufacturing scale.

Nevertheless, the trajectory is becoming harder to ignore.