When NVIDIA was finally allowed to sell H20 chips to China, something unexpected happened: “China said, we don’t want those chips. We want to develop self-reliance, self-sufficiency in those areas.” Fracturing isn’t unilateral – China is pushing for decoupling too.
China is no longer content being “the workshop of the world” churning out toys and furniture. It’s “genuinely pushing the technological frontier” in batteries, EVs, some areas of pharmaceuticals, and biotech.
In AI, the US lead is now measured in months, not decades. The race is real and both sides are running.
Why China Wants Independence
The logic is symmetrical to American concerns:
Supply chain security: Dependence on US technology creates vulnerability Strategic autonomy: Self-sufficiency in critical sectors enables independent action Technological sovereignty: Controlling your own tech stack prevents foreign leverage
Export controls taught China a lesson: reliance on foreign technology is a strategic liability. The response is accelerated domestic development.
The Acceleration Effect
Ironically, US restrictions may have accelerated Chinese capability development. When you can’t buy the best chips, you invest harder in making your own. When you’re cut off from ASML’s latest machines, you double down on domestic lithography.
The fracturing creates incentives for capability development on both sides – making the technological competition more intense, not less.
Key Takeaway
As lithography economics shows, technology chokepoints cut both ways. Restrictions accelerate the race to break dependence – from both directions.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
