Rakesh Kumar, a professor of electrical and computer engineering at the University of Illinois Urbana-Champaign and author of Chip Age: How Semiconductors Became the World’s Most Powerful Resource, says U.S. export controls on advanced chips have failed to freeze China’s semiconductor industry.
Days before the Biden administration unveiled sweeping export controls in October 2022, Kumar warned in Fortune that the crackdown would not work. Four years later, he says the controls do not seem to have worked. Chinese processors are closing the gap with U.S. rivals, and the country’s AI models already match some of the best models in the U.S.
Kumar argues that for most AI applications, the most advanced chips are not necessary. He says robotics, smart cameras and other widely used AI applications do not require the latest silicon. By cutting China off, he says, Washington gave Beijing an incentive to build domestic alternatives.
'Export controls spurred China to invest all this money to set up an ecosystem where they can now serve these applications by themselves,' Kumar says. 'Not only have export controls failed in that sense, but they’ve had the opposite effect.'
The story is visible across the sector. Huawei, once on the brink of death under U.S. sanctions, is now releasing premium smartphones and AI processors. On Oct. 13, Huawei said it had shipped more than 100 million devices powered by its homegrown Kirin processors since 2023.
China is also advancing on the software side. Kumar says Chinese models are 'very, very close, in terms of performance, to the models from the U.S.' Chinese AI lab DeepSeek and startup Z.ai have adapted their flagship models to run on Huawei’s Ascend processors. Meituan said in June that it had trained a 1.6-trillion-parameter AI model entirely on domestically made chips.
The numbers come first. Nvidia’s share of data center chips in China fell to 34% in the first half of 2026, while shipments of its AI accelerators dropped by 44% compared with a year earlier, according to IDC data cited by Reuters. In memory chips, China’s ChangXin Memory Technologies said it would debut a new memory chip architecture by the end of the year, which it said could put it ahead of Samsung, SK Hynix and Micron.
Washington’s stated goal has shifted from stopping Chinese AI development to keeping the U.S. at the frontier. But Kumar says the policy debate keeps moving the goalposts. He points to workarounds cited by U.S. officials, including top-end Nvidia chips turning up inside China and accusations that Chinese labs are distilling American models.
Capital rewards clear rules. When policymakers try to micromanage a strategic race from Washington, they do not just create friction for rivals abroad. They also force domestic and allied companies to spend more on workarounds, compliance and duplication.
The market has already voted on the limits of this approach. China’s chipmakers are adapting with algorithmic techniques, open-sourcing and advanced packaging, while relying on less sophisticated equipment to squeeze out better performance. For the taxpayer and for free enterprise, the lesson is blunt: industrial policy can slow a competitor, but it can also fund the competitor’s next round of innovation.
