China closes 2 years AI chip technological gap to 6 months

USA restricted?export of equipment and components for the production of advanced chips to China in October 2022.?In 2023 USA imposed further restrictions on the export of advanced semiconductors.

AI research institute of China Telecom has now launched its open sourced Telechart-115B and unnamed chip, containing over 100 billion and 1 trillion parameters LLMs respectively, probably using Huawei's?Ascend chips.

On 19 March 2024 we read that Nvidia announce its?latest and fastest GPU, Blackwell, which was touted to be able to train 1 trillion parameters LLMs models.

Within 2 years of?USA?trade restrictions, China?has caught up, leaving?now only 6 months headstart for Nvidia, before it catches up with further improvements.

It is impossible for USA or Europe to match the single minded focus of the China chip researchers. This 6 months gap will soon close and China will leave the competition in the wind.

The competitive advantage that the USA semiconductor industry once held is eroded by China's focus on overcoming trade restrictions, innovation bottlenecks, and resource limitations. China's long-term strategy of fostering domestic chip production, combined with its enormous financial and human resources, could very well allow it to take the lead in AI and semiconductor technology within months if not a year.

What Does This Mean for the USA and Global Tech Players?

Nvidia, ASML, and Samsung, are already feeling the ripple effects of USA restrictions. Losing access to the vast Chinese market, which represents a significant portion of the global demand for semiconductors and AI solutions, will inevitably impact their revenue streams and growth trajectories.

In the short term, USA companies may maintain an edge with innovations like Nvidia’s Blackwell GPUs. However, if China's momentum continues at this pace, it’s not hard to imagine a future where Chinese semiconductor firms outcompete global giants in both performance and cost. The economic fallout for companies that once dominated these industries will be significant.

The Regret of Trade Restrictions

USA tried to restrict export of advanced semiconductor technology to maintain technological lead by alleging national security concerns. However, these restrcitions have accelerated China’s drive for self-sufficiency. As a result USA companies could soon face a highly competitive global tech landscape where China holds the upper hand.

USA will live to regret its decision. It not only lost access to lucrative China business opportunities but also failed to prevent China from achieving technological parity. In a world where innovation cycles are measured in months and not years, such missteps could have long-term consequences on USA's competitiveness.

Conclusion

Instead of slowing China’s progress these restrictions have had the opposite effect. China's rapid advancements in AI and semiconductors, demonstrated by large-scale models like Telechart-115B and its trillion-parameter LLM chip, are closing the gap with U.S. tech leaders like Nvidia. The window of competitive advantage is shrinking fast, and soon, China would emerge as the world leader in both AI and chip technologies, leaving the rest of the world struggling to keep pace.

As USA companies continue to lose access to the Chinese market, USA and its allies have foolishly fueled their own obsolescence in one of the most crucial technological battles of the 21st century.