US Chip Ban To Slow Chinese AI Endeavors

The U.S. just dropped its most aggressive tech curb yet as new export limits have officially cut off key AI chip sales to China. The move directly targets Nvidia and AMD, whose chips have powered China’s rise in artificial intelligence. U.S. officials made the decision this week. The goal? Slow China’s AI progress.

US Attempting to Slow Chinese AI Endeavors

“It’s a brutal environment for folks who want to spend billions of dollars on a 30-year project,” said Scott Lincicome of the Cato Institute. This week’s restrictions block billions in chip sales, harming both Nvidia’s H20 and AMD’s MI308 are. Tweaks made by Nvidia to avoid prior bans have seemed to be thrown out the window.

It’s safe to say that Wall Street was rattled by this move. Both Nvidia and AMD shares both dropped about 7%, and broader tech markets also dipped. Investors had hoped tariffs might ease, but some are now more pessimistic. The decision followed China’s AI startup DeepSeek proving it could build powerful models with fewer chips. DeepSeek’s massive success seemed to spark action inWashington.

In Beijing on Thursday, Nvidia CEO Jensen Huang met Vice Premier He Lifeng. He also visited DeepSeek’s founder Liang Wenfeng. “The China market is very important to us,” Huang said in a video posted by Chinese state media. He wore a suit and tie—not his usual leather jacket. “The technical excellence of Chinese industry is quite impressive” according to Huang.

Nvidia admitted export rules have hit its operations hard. Despite the restrictions, Nvidia is doubling down at home. On Monday, it announced plans to build AI supercomputers in Texas. That lines up with Trump’s push to boost domestic chip manufacturing. The Trump administration seems to be happy about that overall, but there definitely is still some economic uncertainty in the tech and AI sector. Trump had imposed 145% tariffs, then exempted some electronics a few days later. On April 9, the government officially told Nvidia it would be hit with new export limits. The fallout is huge. Nvidia said it expects a $5.5 billion charge this quarter, and AMD expects as much as $800 million in losses.

China’s Response

For Chinese firms, the rush to buy chips began immediately. Orders for Nvidia’s H20 hit $18 billion in just the first three months of 2025. Major buyers included Alibaba, Tencent, and ByteDance, all major Chinese AI companies. Now those companies may shift to local Chinese suppliers. Citigroup analysts say firms will likely replace Nvidia with chips from Huawei and Cambricon. That would accelerate Beijing’s push to reduce dependence on U.S. tech and chips.

Commerce Secretary Howard Lutnick made the administration’s stance clear during his January hearing. “If they’re going to compete with us, let them compete,” Lutnick said. “But stop using our tools to compete with us.” The White House is also considering wider restrictions on AI chip exports. As part of these restrictions an investigation into national security risks tied to foreign-made semiconductors is currently underway. As the U.S. tightens controls, Nvidia’s grip on the Chinese market weakens. But Washington’s message is unmistakable. “If you want to build AI,” one official said privately, “you’ll have to do it without us.”

Featured Image Credit: Tara Winstead; Pexels: Thank You!

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