Chinese AI chipmakers, including Huawei Technologies and Cambricon, have sharply raised prices for current and next-generation processors as soaring costs for high-bandwidth memory squeeze Beijing’s drive to build a domestic alternative to Nvidia’s advanced AI accelerators.

Huawei has raised the indicated price of its Ascend 950DT accelerator card to more than 250,000 yuan ($37,255), two people familiar with the matter told Reuters. Depending on contract terms, the new price is 20% to 50% higher than levels quoted to customers just two months ago.

The increase underpins an emerging problem for China’s semiconductor industry: developing a domestic AI-chip supply chain is becoming more expensive just as Beijing is pushing technology companies to reduce their reliance on U.S. suppliers.

Huawei has publicly said its Ascend 950DT, its most advanced AI chip, will become available in the fourth quarter of 2026.

Beijing-based Cambricon has also raised the indicated price of its next-generation processor, tentatively known as the 690, by 20% to 30% from levels discussed with customers two months ago, according to two sources. Smaller Chinese chipmakers MetaX and Iluvatar CoreX have made similar increases, the sources said.

HBM, a specialized type of memory critical to modern AI accelerators, remains at the center of the price increases. HBM stacks memory chips vertically and allows processors to move very large volumes of data at high speeds, making it essential for training and running complex AI models.

The market for advanced HBM is dominated by South Korea’s SK Hynix and Samsung Electronics and U.S.-based Micron Technology. China’s access to some advanced HBM products has been restricted by U.S. export controls, forcing domestic chipmakers to seek alternative supplies.

Since Washington tightened controls on exports of certain advanced HBM products to China in December 2024, Chinese companies have relied on grey-market channels to obtain supplies, according to the sources.

However, that route comes at a premium. HBM procured through such channels can cost several times more than prices paid by buyers outside China, the sources said. Because memory represents a substantial portion of the manufacturing cost of an AI accelerator, the higher component prices are being passed directly to customers.

The problem reveals the difficulty of creating a fully domestic AI-computing ecosystem. China can design processors to replace Nvidia products, but advanced AI systems require more than the accelerator itself. High-performance memory, packaging, manufacturing capacity and supporting software all form part of the supply chain.

Huawei has said its Ascend 950 series will use two proprietary HBM technologies, HiBL 1.0 for the 950PR and HiZQ 2.0 for the 950DT, although the company has not disclosed where or how the underlying memory is manufactured.

The 950DT is designed primarily for developing AI models and generating responses, while the 950PR is intended to process user requests before they are passed to the model. Prices for Huawei’s existing chips have also increased, suggesting the pressure is not limited to the company’s newest products.

The Ascend 950PR, which sold for roughly 60,000 yuan per card at the beginning of the year, now costs more than 80,000 yuan, representing an increase of about 30%, according to two sources.

The older Ascend 910C board has risen to more than 110,000 yuan from about 90,000 yuan at the beginning of the year, they said.

The increases raise the cost of deploying AI computing capacity at a time when demand from Chinese technology companies is accelerating. They also expose a contradiction at the heart of China’s effort to replace Nvidia.

U.S. restrictions have created a large domestic market for Chinese accelerator manufacturers by limiting Chinese companies’ access to Nvidia’s most advanced processors. But the resulting demand is now colliding with shortages of critical components, potentially limiting how quickly domestic suppliers can scale.

China’s AI-chip market is estimated at about $50 billion, making the opportunity substantial. The restrictions have effectively created space for Huawei, Cambricon, MetaX and other domestic suppliers to expand, but capturing that market requires them to compete not only on chip performance but also on price and availability.

The pressure is already affecting the allocation of computing hardware.

Iluvatar CoreX has doubled its shipments of graphics processing units, or GPUs, to ByteDance, the owner of TikTok, to 100,000 units this year as computing constraints have intensified, according to one source.

The company has also diverted GPUs originally intended for its own internal use to meet ByteDance’s requirements, the source said.

ByteDance is a major buyer of domestic AI computing capacity, and Huawei is its largest domestic supplier, followed by Cambricon and Iluvatar CoreX, according to the three sources.

The competition for supply suggests that Chinese AI companies could face a difficult trade-off between expanding computing capacity and controlling costs. Higher accelerator prices could ultimately raise the cost of training and operating AI models, potentially slowing the pace at which companies can deploy them or increasing the cost of AI services.

For chipmakers, meanwhile, higher prices may help offset expensive memory procurement and constrained component supply. But sustained price increases could undermine one of the principal advantages of domestic alternatives: their ability to offer Chinese customers a viable and potentially more economical substitute for restricted Nvidia products. That makes HBM more than a component-level bottleneck. It has become a strategic constraint on China’s broader AI ambitions.

The situation also shows why U.S. semiconductor restrictions can have effects beyond simply preventing Chinese companies from buying particular chips. Restricting access to advanced processors and memory can force Chinese companies to rebuild entire portions of the AI hardware supply chain, increasing costs and creating bottlenecks in areas where domestic alternatives remain limited.

President Donald Trump’s promise to pay every adult American $5,000 if Republicans retain control of both chambers of Congress in November is facing immediate questions over its cost, funding and legal viability, while also exposing a growing divide within the Republican Party over fiscal policy.

Speaking at the GOP’s midterm convention in Dallas, Trump told supporters that he would issue the payment if Republicans win control of both the House of Representatives and the Senate.

“Here is my promise: if the Republicans win the House of Representatives and the United States Senate, both of them… because of our tremendous strength and success economically, I will issue a dividend to every adult citizen in the United States of America for $5,000,” Trump said.

“I’m asking you to pretend that I’m on the ballot,” he added.

The pledge comes as Democrats are currently projected to win control of the House, a result that would constrain Trump’s legislative agenda and provide a political verdict on his economic policies midway through his second term.

But the mathematics of the proposed dividend are formidable. With roughly 270 million American adults potentially eligible, a $5,000 payment would cost approximately $1.35 trillion if distributed universally. That would put the proposed program in the same order of magnitude as some of the federal government’s largest annual expenditures and add substantially to an already strained fiscal position.

The federal deficit is approaching $1.8 trillion for the fiscal year to date, with the government spending more than $6 trillion between October and July. The deficit stands at roughly 5.8% of gross domestic product.

The government has also spent about $1.27 trillion on interest on the national debt during the fiscal year to date, while defense spending for 2026 is about $1.36 trillion. At the same time, federal borrowing costs have increased as investors contend with persistent inflation, elevated Treasury issuance and concerns about the sustainability of U.S. debt. Federal debt stood at 122.6% of GDP in the first quarter of the year.

The financing question is therefore central to the proposal. Vice President JD Vance has defended the dividend as a payment that could be financed by tariff revenue, arguing that Trump’s trade policies are generating substantial receipts from foreign companies and countries.

“We’re taking in an extraordinary amount of revenue because the president of the United States is actually standing up to both foreign companies but also foreign countries who have been taking advantage of America’s workers for pretty much my entire life,” Vance said on Fox News.

Vance described the proposal as “a dividend for American workers,” arguing that Americans should share in the wealth generated by the administration’s policies.

“We’re all working together. We’re all on the same team, and if we continue to create wealth, that wealth is going to go back to the American people,” he said.

But the scale of the proposed payments raises questions about whether tariff receipts could reliably finance them without additional borrowing or cuts elsewhere in the federal budget. A $1.35 trillion annual-style payout would require an exceptionally large and sustained revenue stream, particularly if the payment were intended to become a recurring benefit rather than a one-time transfer.

Trump’s proposal is also colliding with a more traditional Republican concern: fiscal discipline.

Rep. Chip Roy, a Texas Republican and fiscal hawk, questioned how the government could afford to distribute $5,000 to hundreds of millions of adults. Former Rep. Bob Good, who chaired the House Freedom Caucus, called the proposal a “socialist vote-buying scheme.”

“Maybe some of us think dependency is evil & soul-sucking in all its forms,” Roy wrote on X.

Former Rep. Marjorie Taylor Greene, a prominent Trump critic, was even more blunt, suggesting that the payments would arrive only if voters backed Republicans.

“$5,000 for the peasants will be in the mail after the election only if you vote Republican, along with those DOGE and tariff money checks,” Greene wrote on X.

The comments point to the unusual political problem created by the proposal. Democrats can portray the payment as an expensive expansion of government spending, while fiscal conservatives within Trump’s own party can argue that it conflicts with traditional Republican opposition to large federal transfers.

There could also be legal questions surrounding the timing and political framing of the pledge.

Federal law prohibits offering or making a payment to induce someone to vote, withhold a vote, or vote for or against a candidate. Violations can carry criminal penalties, including fines and imprisonment.

Trump did not explicitly say that an individual would have to vote Republican to receive the $5,000. His promise was conditioned on Republicans winning both chambers of Congress. That distinction could become important in determining whether the proposal constitutes an unlawful inducement to vote.

The administration also has a history of floating large payments to Americans that have not materialized.

Earlier in Trump’s second term, he backed the idea of a $5,000 “DOGE dividend,” under which savings generated by cuts from the now-defunct Department of Government Efficiency, then led by Elon Musk, would have been distributed to Americans.

Trump has also repeatedly floated a $2,000 tariff rebate funded by tariff revenue. Neither proposal has come to fruition. The latest pledge therefore faces a credibility question in addition to its fiscal one.

The concept of direct government payments is not new. During the Covid-19 pandemic, both the Trump and Biden administrations authorized trillions of dollars in payments to households to support incomes and stimulate the economy. Some economists have subsequently argued that the extraordinary fiscal stimulus contributed to the inflation surge that followed, although inflation had multiple causes, including supply disruptions and energy shocks.

A new $1.35 trillion transfer could similarly have broader economic consequences depending on how it is financed and when it is distributed. If funded through borrowing, it could increase Treasury issuance and potentially place additional upward pressure on borrowing costs. If funded through higher tariff receipts, the economic effect would depend on how much of those tariffs are ultimately borne by foreign producers versus U.S. importers and consumers.

Former Trump legislative director Marc Short said the pledge represented another departure from the fiscal conservatism traditionally associated with the Republican Party.

“The president is a performer and having the pageantry of the convention, he’s going to throw out something,” Short said.

Short argued that the proposal amounts to redistribution and warned that Republicans would not win elections by attempting to compete with Democrats on the size of government benefits.

“You’re not going to outbid Democrat socialists in the midterm election,” Short said. “It’s one more step down the populist lane of what can we promise the American people to win their vote.”

That criticism captures the broader significance of the proposal. Trump’s political coalition has increasingly emphasized direct economic benefits to Americans, protection from foreign competition and government intervention on behalf of domestic workers, even when those policies conflict with older Republican preferences for smaller government and fiscal restraint.

The $5,000 dividend is therefore more than an election promise. It is largely seen as a test of how far the Republican Party has moved toward economic populism, and whether voters will respond more strongly to the prospect of a direct payment than to concerns about deficits, debt and the long-term cost of financing it.

For the proposal to move beyond campaign rhetoric, however, the administration would still need to overcome the basic arithmetic: roughly 270 million adults, $5,000 per person and a potential $1.35 trillion price tag, all against a federal government already running a deficit approaching $1.8 trillion.

The November election may determine the political strength Trump has to pursue the idea. It will not, by itself, resolve the question of who ultimately pays for it.