The Prof G Pod with Scott Galloway
China Decode: Can China Challenge Nvidia’s Dominance?
02 Jun 2026
Transcript generated automatically by AI and may contain errors.
Chapter 1: What is the main topic discussed in this episode?
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it really couldn't be a bigger story. Already, Jensen Huang, the CEO of Nvidia, has said that his company has largely conceded, those are his words, largely conceded China's AI chip market to Huawei. In 2026 so far, Huawei has captured around 50% of the Chinese market for AI chips.
What this really means is that chip companies in the future might stop obsessing so much as they do right now about how small the transistors in the semiconductor should be, and they might focus more instead on how fast the data moves through a semiconductor.
Welcome to China Decode. I'm Alice Han.
And I'm James King.
In today's episode of China Decode, we're discussing the latest sign that China's chip industry might overtake NVIDIA, a growing trade war with the European Union, how Hong Kong has become more popular than Switzerland for the mega-rich. That's all coming up, but first, let's do a quick check-in with how the Chinese markets are starting the week.
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Chapter 2: How is Huawei positioning itself against Nvidia in the AI chip market?
What do you think, Alice?
Yeah, it's so complicated in so far as I understand it. Moore's law is predicated on the doubling of the number of transistors on a chip. And to your point, it's ever getting miniaturized smaller and smaller in terms of the components on the chip. Now, apparently, TSMC is understanding that it's hitting the upper limit of Moore's law and is now going into 3D stacking.
which is not too dissimilar, I think, from this TAO philosophy in terms of increasing efficiency on a chip. But if TSMC is going in that direction because it recognizes it's hit the upper limit, my question is, can Huawei and other players, Hua Hong and SMIC, who are PurePlay foundries as well, in the space, can they reach the aggregate amount needed to meet Chinese demand?
I thought it was interesting. And again, here I'm citing the Council on Foreign Relations, so we've got to take it with a grain of salt. But insofar as they understand it through their own research, the best US AI chips are still five times more powerful and compute than what Huawei can currently do. And apparently, according to them, that gap is widening.
And according to their calculations, only around, you know, in the most bullish scenario, Huawei can only produce about 4% of the aggregate AI compute that Nvidia can produce. That is a huge, I think, takeaway, because even if they are getting more efficient, in the short term, the big question, a trillion, multi-trillion dollar question is, can Huawei produce enough?
to meet domestic Chinese demand, which is only going to increase, as we've previously talked about, because of the massive public and private sector investment in data centers and AI across the stack. I'm a little bit worried there, but I don't, bet against the Chinese in terms of finding ingenious ways to work around existing technological constraints.
But in the short term, I'm a little bit worried about whether or not they can meet the demand currently. One last data point I thought was super interesting I'm still bullish, maybe this is out of consensus, Jensen Huang in China. Jensen Huang just got announced that he is on the board to Tsinghua University's School of Economics and Management, on which the Apple CEO, Tim Cook, is also a member.
Maybe this is a signal that things are heading in a more positive direction, that some of the floodgates may be opened softly. But my number one question is, can China meet the demand that is only arising for AI compute with the existing domestic demand? competition?
Well, that's the $64 million question, or probably $64 billion question. I have no way of knowing, but my sense of this is that the running is going in China's favor. And I think that this statement by He Tingbo, Huawei's chip queen, gives a sense of confidence. It gives a sense that China's got an alternative method, an alternative route towards creating the types of compute power that it needs.
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Chapter 3: What innovative strategies is Huawei employing beyond Moore's Law?
I found it interesting that the majority of the trade surplus is in cars and machinery,
uh right now but china's making a lot of inroads uh in in the chemicals industry as well so it wouldn't be surprising to me that if we have this conversation in five ten years that it it is the global um dominating supplier in the chemicals industry but as a european i have to ask you you know what where did we go wrong where did the europeans miss the train?
Yeah, those are great questions, Alice. I would say some of the biggest things to change recently was a statement by French President Emmanuel Macron. He called on the EU to take inspiration from the United States on trade measures aimed at protecting strategic industries in Europe. And then he had this quote, and this really sums up
the realization that is dawning not only on Emmanuel Macron, of course, but on many policymakers in Europe. He said, quote, China is literally killing a large part of European industry. And I must say, he couldn't be more correct. We've all heard about floods of Chinese electric vehicles coming into Europe and really dealing body blows.
to European car makers, but that is by no means the only sector in Europe that is getting hit. And you mentioned the issue of whether or not Europe should have woken up to this a long time ago. And it's so clear that they should. I have been so exasperated
looking at Brussels, the center of EU power, and looking at the national governments that are members of the European Union, and looking at the government here in the UK, and wondering, why is it
that they are failing to heed so many warnings and so many research papers written by think tanks all over Europe talking about the rise of China's tech challenge and the way that this is going to impact one industry after another across Europe.
And, you know, until people like Macron a couple of months ago started to talk in the way that I've just mentioned, we really didn't get hardly anyone sounding the alarm. But now we have. And I guess that's why this is topical at the moment. We've got a French-led coalition of five EU countries, that is France, Italy, Spain, the Netherlands and Lithuania.
And they are urging Brussels to rapidly deploy stronger cross-sector tariffs and defensive trade tools to protect European industries from this surge of Chinese state subsidized imports. And the trade deficit that Europe has with China is enormous. It looks like There are forces in Europe, let's put it that way, that are limbering up for a trade war. They want to have a trade war with China.
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Chapter 4: What is the significance of He Tingbo's role in Huawei's chip development?
places like Hungary traditionally, but also increasingly France and Germany in the automotive and green tech sector. So automotives and batteries were the highest share of that greenfield FDI investment breakdown. So my big cynical take and question of sorts is,
At the end of the day, do these barriers matter if China is just going to put up shop and factory in Europe, do the kind of reverse tech transfers that part of Brussels actually wants, and bring manufacturing jobs to Europe in the way that Japan did in the 80s?
Remember when Reagan put on voluntary export restrictions, basically tariffs on Japanese goods, in particular automotives, and then Toyota and other conglomerates responded by setting up factories in middle America? Yeah. Maybe that is the future and all this tariff stuff is just a nothing bagger. But maybe I'm overly cynical.
So you're saying, Alice, that it won't save European industry anyway because Chinese investors will move into production sites within the European Union like Hungary and whatever. And those guys are going to go out of business anyway. I mean, the Germans and the French, yeah.
When I was in China, prior to this recent trip in late November, I had a friend of mine who was advising BMW in China. And it's just dire straits, and Audi too, in terms of just their outlook in China. So then the other question is how much of a lobbying power can they have if their share of the domestic market is ever winnowing?
And maybe, you know, we end up in an equilibrium, a national equilibrium where the Chinese create jobs in Europe, in green tech, and then the Europeans feel as though they don't need to put on these tariff barriers because... the industry is moving to Europe via Chinese firms like BYD and Cherry and CATL.
My personal fear is that what we get here is an ill-advised set of trade barriers erected by Europe to keep out Chinese competition, thereby protecting many of the ailments that have got Europe into this state in the first place. In other words,
huge inefficiencies across the board, high energy costs, high labor costs, highly restrictive labor laws, restrictive investment laws, very low productivity in almost all countries. So So I fear that we could end up with the worst of both worlds, that is, restrictive policies towards China and that protect inefficiencies in Europe, and then a kind of trade war that eventually China wins.
So Europe doesn't reform itself urgently, such as it clearly needs to, and it ends up losing the trade war against China. I fear that that could be the outcome.
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