Nvidia (NASDAQ:NVDA) CEO Jensen Huang just called out Washington's chip crackdownsaying it might've done the opposite of what it intended. Speaking at Computex in Taipei, Huang said U.S. export controls didn't stall China's AI pushthey accelerated it. Four years ago, we had 95% of the market in China. Now we're down to 50%, he said. The other half? Homegrown competitors, supercharged by local funding and urgency. Huang pointed to Huawei and other Chinese players who are now aggressively building alternatives. They will use the second-best. Local companies are very determined, he added.

Warning! GuruFocus has detected 4 Warning Signs with NVDA.

It gets worse. The Biden-era AI chip rulesmeant to limit the global spread of cutting-edge AIforced Nvidia to scrap its customized H20 chip and eat a $5.5 billion write-down. Huang didn't mince words, calling the assumptions behind the AI diffusion rule fundamentally flawed. The Trump administration now appears to agree, signaling it'll reverse course and ditch the planned three-tier licensing structure. If finalized, that shift could open the door for U.S. companies to expand AI exportsjust not to nations viewed as adversarial.

Meanwhile, Beijing isn't standing still. Chinese tech giants like Tencent (TCEHY) and Alibaba (NYSE:BABA) are already moving to secure domestic chips, in line with government pushback against U.S. restrictions. Washington has warned companies to stay away from Chinese AI siliconlike Huawei's Ascendbut that may only be deepening the split. While the U.S. teams up with the UAE to build mega AI data centers powered by Nvidia chips, the real takeaway is this: trying to choke off China's access might have lit a fuse that's now burning faster than expected.

This article first appeared on GuruFocus.

View Comments