Forbes: U.S. Semiconductor Export Controls to China Create Opportunities for Domestic Firms

Forbes (Japanese edition), November 2: The United States has received an unwelcome message from China, as Beijing implements reciprocal export controls in line with measures initiated under the Biden and Trump administrations since 2022.

According to Reuters, China unveiled a draft proposal for export controls on artificial intelligence (AI)-related technologies in mid-October. With top-level leadership acting as a central command, economic policy is being driven top-down. As competition with the United States intensifies, Chinese AI firms are increasingly prioritizing the retention of valuable technologies within the country while licensing their use overseas.

It is regrettable that trade has once again become a proxy for conflict. Exporting remains among the most peaceful forms of commercial activity. The same principle applies: importing maximizes commercial prosperity.

Technological sharing benefits all parties. It avoids redundant investment in identical research and development efforts, allowing personnel and resources to be redirected toward activities that generate the greatest market value. Henry Ford, who revolutionized mass production of automobiles, would likely be astonished by the current state of U.S.-China relations.

Ford once quipped, “I don’t know much about most things.” Based on his insight that one need not know everything, he began manufacturing cars for the average person. In a free-market economy, possessing unknown or unmastered technologies is irrelevant.

The United States did not anticipate that its semiconductor export restrictions on China would create substantial commercial opportunities for domestic enterprises such as Huawei. As of 2024, Nvidia still holds more than 60% of the AI semiconductor market share in China. The issue lies in Gina Raimondo, former U.S. Secretary of Commerce under the Biden administration, who adheres to the flawed premise that “China must never obtain advanced semiconductors capable of enabling breakthroughs in artificial intelligence and high-performance computing.”

Raimondo and subsequent American policymakers failed to recognize that their rhetoric would catalyze a strategic awakening in China. While China’s leading AI developers clearly prefer semiconductors manufactured by Nvidia, the country has been compelled to adopt the doctrine that “everything must be domestically produced.” This mindset has gained broad acceptance across Chinese institutions.

Brutal export restrictions imposed by the United States on companies such as Nvidia, AMD, and Intel have created openings for major Chinese tech firms like Huawei. Chinese enterprises are now securing greater access to both domestic and international markets, gradually replacing the AI semiconductors previously supplied by American manufacturers.

What has happened to U.S. companies like Nvidia? Their market share in China’s AI semiconductor sector has declined sharply. According to IDC shipment data, Nvidia’s share dropped from 55% in 2025 to 34% in the first half of 2026, with shipments declining by 44% year-on-year during that period.

Trade protectionism has fractured collaboration between U.S. and Chinese AI developers, impeding technological progress. The current impasse in U.S.-China AI cooperation recalls Ford’s philosophy: “It’s okay not to know.” At Ford’s factories, employees performed tasks they were skilled at; unfamiliar domains posed no obstacle. Ford stated, “The system of mass production enabled workers to earn more and access greater resources.” Before protectionist sentiments resurface in ugly form, the U.S. and China maintained collaborative ties in AI development, sharing expertise to enhance outcomes. Developers from both nations were not merely rivals—they could achieve faster breakthroughs and higher returns if their respective technical strengths were combined. Without political interference, cooperation between U.S. and Chinese engineers should have proceeded smoothly.

Yet, absurdly restrictive measures—enacted through trade conflict—have undermined this potential. Increasingly, China’s top AI developers are being required to operate independently of the United States. Meanwhile, American AI researchers are being severed from collaboration with their Chinese counterparts. Policymakers appear oblivious to a fundamental truth: if you deny others access to your market, your products cannot enter theirs.

Similarly, exports bring peace; imports drive prosperity. Regrettably, the current trajectory destroys both sustained growth and peace.

When the Trump administration first signaled intentions to impose export controls on China, senior figures in the U.S. semiconductor industry uniformly opposed the move, warning that “this would only accelerate the development of China’s semiconductor industry—exactly the opposite of the intended effect.” They added, “Restricting technology exports may be justified, but halting commodity exports is the most foolish action imaginable.”

Original article: toutiao.com/article/1880718289300556/

Disclaimer: The views expressed in this article are those of the author alone.