Trump's First-Term Ban On EUV Tools Stalled Huawei, SMIC, Cambricon — Now China's Chip Factories Are Roaring Back, Warns David Sacks
News Summary
White House-appointed “Crypto Czar” David Sacks warned that Chinese semiconductor manufacturers are surging back despite previous export controls, planning to triple artificial intelligence processor output. He highlighted that Chinese companies like Huawei, SMIC, and Cambricon are significantly increasing production and will soon compete globally with American chips. Three new fabrication plants dedicated to AI processors are launching, with one starting production by year-end and two more in 2025. SMIC, China’s top foundry, plans to double its 7-nanometer capacity next year. Sacks credited President Donald Trump’s first administration’s “far-sighted decision” to block China’s access to extreme ultraviolet (EUV) lithography tools for keeping Chinese chips “still behind ours,” but criticized other restrictions from the Joe Biden era as counterproductive. He advocated for the U.S. government to help American AI companies win this global competition. From an investment perspective, Cambricon raised approximately $600 million this year, while four Chinese AI chipmakers, including Biren and MetaX, are seeking IPOs after raising $3 billion combined. Chinese semiconductor stocks surged following DeepSeek’s announcement of new chip-optimized standards, according to a Financial Times report.
Background
The semiconductor industry has been a central battleground in the escalating technology competition between the United States and China. The U.S. government, particularly during the Trump administration, implemented a series of export controls aimed at restricting China's access to advanced semiconductor technology and equipment. A key measure was the ban on Dutch company ASML selling extreme ultraviolet (EUV) lithography machines to China. These restrictions were designed to impede China's progress in high-end chip manufacturing, especially targeting key players like Huawei and SMIC. However, China has consistently invested heavily in its domestic semiconductor industry, striving for technological self-sufficiency and supply chain security. As of 2025, Donald J. Trump has been re-elected as U.S. President, and the continuity and adjustments of his administration's tech policy towards China remain a critical market focus.
In-Depth AI Insights
What is the long-term efficacy of U.S. export controls and their impact on innovation? - U.S. export controls on China's semiconductor industry, particularly regarding EUV tools, have indeed slowed China's progress in cutting-edge processes (e.g., 5nm and below) in the short term. - However, these restrictions have also spurred immense domestic impetus for substitution and technological breakthroughs in China, driving Chinese companies to achieve advancements and capacity expansion in more mature processes (e.g., 7nm). - In the long run, over-reliance on restrictions could be counterproductive, potentially accelerating China's self-sufficiency drive and leading to the formation of two distinct global tech ecosystems. This not only complicates global supply chains but also stimulates Chinese innovation on non-Western technological pathways. What does China's chip industry