NVIDIA shares still lower and dragging down the rest of the semis after that surprise

$5.5 billion hit tied to China chip export controls, but the restrictions may represent an

opening for one Chinese competitor. Dear Jibosa tells us why in today's tech check, D.

Hey, good morning, Leslie. So put simply, the latest controls. They boost Huawei while

Nvidia pays the price. They ban H20s, but they do nothing to cut Huawei off from the tools

and the components needed to build its own chips and systems. And this really hits on a theme that

has been most threatening to American AI dominance this year. Necessity is the mother of invention.

It's not that Huawei comes anywhere

close to Nvidia's capability in terms of raw performance or ecosystem. It doesn't. And in fact,

the H20 chips, Nvidia was selling to China. They were inferior to. The reason Nvidia has to write

them off anyways is because no one outside of China would actively choose to use them when presented with a choice.

China hasn't had a choice, though, of course, thanks to those existing export controls that

banned the higher-end semis.

Now, just like Deepseek, a Chinese startup that built a GPT4-level model with far fewer resources,

Huawei is pushing to offer its own alternative to Nvidia and now with far more

urgency. Moreover, the Chinese government and companies, they're even more incentivized to use them.

Huawei, meanwhile, it's already getting better at doing more with less its latest AI infrastructure

architecture. It essentially stitches together more hardware to create something

that reportedly mimics the performance of Nvidia's high-end systems. This isn't efficient,

it's not elegant, but it is effective enough to keep moving forward without US chips. And that

is critical because as Chinese AI at large gains more independence, that ultimately hits

American leverage. Export controls, they only work if China needs what we are denying. Once domestic

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