First the US blocked China from buying NVIDIA's H100, but allowed NVIDIA to sell them a China-special nerfed H100, the H800
Then the US blocked the H800
Then the US realized that China was indeed accelerating their US independence, so does a U-turn and has now approved the H200 (more powerful than both the H100 and H800) for sale to China, on a case-by-case basis
However - and here is the real kicker - China themselves are now blocking H200 purchases since they want the acceleration towards Chinese homegrown solutions to continue, and now we have Chinese models being served on Huawei Ascend chips, with next generation Ascend 750 chips (using CXMT made memory) targetting training currently in testing.
Now we have Apple asking the US government for permission to buy memory from CXMT given the global shortage!
Of course they have ways around this -- you can get black market GPUs and also API costs are SUPER cheap there -- they hack the subscription model, bundle a bunch of user accounts, and route API requests through them.
And yes they are getting to parity with US technology and will get there in a few years, they have decent chips but still not the quality of NVIDIA.
It's really a very complex situation
Without access to ASML EUV machines, the Chinese will be stuck on older less-dense chip manufacturing nodes, but in terms of building a cluster this is just a cost/efficiency issue - it means you need more chips, more electricity!
Deepseek and Kimi are writing paper after paper with substantial architecture improvements for efficiency, because they can't just throw more hardware at the problem.
And China is now doing something on the hardware axis; which it may have never explored were it not for the sanctions.
Gaining parity on the semiconductor fab front has been official government policy as part of their Five Year Plan for at least the last decade, straight from the Politburo. They were always going to go down this path, and with AI playing front and center on their upcoming plan, there’s even more pressure.
There was never a possibility of them not exploring it.
They have always been able to do this, but this time they did have the option to pass.
They’ve also invested in AI separately (before LLMs) in that time period but I’m less familiar with that sector.
The tradeoff is worth it. They’re even publishing papers which blows me away — their efficiency gains quickly become incorporated into frontier models because they are open sourcing them. They would be aggressively pursuing the same chip pipeline strategy as they are today.
US is lagging in efficiency work because the ROI is better elsewhere for us. We have the same tier of talent, once the script flips so can the research.
Let's face it - all bans were dumb. They just gave China the legal (per WTO rules) justification to start producing everything domestically. The bans work as a reverse tariff, as a protectionist measure that actually protects your competitor. If China did those, others could bring China to court at the WTO. But the US did that, so nobody can sue China.