Why the U.S Has Cracked Down on High‑End Chip Exports to China

Amid the volatile global market, the US administration has recently announced measures to rein in the export of advanced semiconductors and chips to China, aiming to limit China’s access to critical technology. This move curbs China’s growing influence in technological advancement and strengthens US national security.

Now most of the companies in the USA whose market is traded through China are now planning to shift their production with an alternative approach. One of the big giants, Nvidia, a leading supplier of chips, now replacing the H20 GPU, previously the most advanced AI chip, is now banned under the tightened export rules. Further, Nvidia is preparing a pared-down version of the chip, expected by July 2025, to comply with new U.S. export controls by reducing its performance and memory.

Revocation of export licences

Since Trump is holding power in the White House, Nvidia is also facing a financial blow. The revocation of export licences and halted shipments could cost the company up to $8 billion, with $5.5 billion in immediate damages. The Chinese market accounted for $17 billion in revenue in fiscal year 2024, about 13% of Nvidia’s total earnings.

Despite the setback, the firm is actively developing China-specific alternatives like a simplified version of its Blackwell chips and the B30 series tailored for AI clusters. Nvidia CEO Jensen Huang has condemned the sanctions, suggesting they could inadvertently accelerate China’s efforts to achieve technological self-sufficiency.

Global chip supply chain is bracing for lasting impacts

The crackdown has also disrupted the Electronic Design Automation (EDA) sector—an essential part of semiconductor development. Leading U.S. firms like Cadence, Synopsys, and Siemens EDA must now obtain export licenses to sell to China, a first-of-its-kind move targeting design-level software. The ban affects major Chinese companies such as Xiaomi, Lenovo, and Bitmain, especially in their efforts to develop cutting-edge 3nm chips like the XRING O1.

As U.S. firms exit or slow operations in China, domestic Chinese EDA firms like Empyrean and Primarius are filling the gap, spurred by state support and a sense of urgency. Ultimately, while the U.S. hopes to retain technological dominance and curb China’s military advancements, the crackdown may usher in a new era of technological bifurcation, where both nations build rival ecosystems. The global chip supply chain is bracing for lasting impacts, with innovation and geopolitics now tightly intertwined.