Chris Miller

They're still far behind what NVIDIA plus TSMC can do in terms of quality and

and quantity.

But there are some people in the administration, including I think David Sachs, you mentioned who argue that if you sell more chips to China, you'll take some of the air out of the effort to build up China's own self sufficient AI ecosystem.

Well, I think it is a key question right now because the Chinese government, as you know as well as anyone, has been fixated on self-sufficiency in semiconductors for over a decade.

And they've made a lot of progress in many types of chips.

But when it comes to cutting-edge AI chips, they're not there yet.

And this is why, from the Chinese government's perspective, there's actually a rationale for keeping these chips out of the market because it opens up space for Huawei and the other AI chip designers in China to sell to China's own AI firms.

I think if you're in the shoes of the Chinese internet sector or the AI sector, companies like ByteDance or Alibaba, they'd actually probably prefer to just get the best chips on the market, which are NVIDIAs.

And so you probably have a bit of a gap between what the tech sector wants and what the Chinese government wants.

But I think this is a space where the Chinese government usually wins these arguments.

And so I think we are going to see some limitations on the number of H200s rather that flow into China.

because the Chinese government does want to support Huawei and support this self-sufficiency drive to the extent that it can.

You know, I think China has made real strides in catching up in many segments of the chip industry, but there are also a number of areas where they're far away from the cutting edge.

If you look first off at the manufacturing of semiconductors, what you find is that TSMC in Taiwan,

is not only able to produce significantly better chips, and we know this because the capabilities of the leading Chinese chipmaker SMIC basically track along TSMC at a five or six-year delay.

That delay has been relatively steady over time.

There's a meaningful delay in terms of quality, and there's a huge gap in terms of quantity because TSMC can access the tools that are used to make chips, machines that are produced by companies like ASML or Applied Materials,

in ways that China can't because of export control.

So on manufacturing quality and quantity, there's a very big gap.

When it comes to chip design, the gap is much, much less significant, which is why Huawei, for example, is a top-notch designer of semiconductors, both for smartphones and also increasingly for AI chips.