China consumes more chips than any other country and imports the largest share of them. Under U.S. export controls it has launched an all-out self-sufficiency drive — and is now actively steering its own companies away from Nvidia, even when Washington allows the sale.
China is both the largest consumer of semiconductors and the largest importer. Its domestic market was worth roughly $186B in 2025 and accounts for over 30% of global demand. That dependence cuts both ways: when trade tensions flared in 2025, Beijing quietly dropped its 125% retaliatory tariff on U.S. logic chips — an area "predominantly dominated by U.S. companies but difficult for China to quickly find alternative sources."
The Information China this week quietly dropped its retaliatory 125% tariffs on certain U.S. semiconductors… the exemptions pertain solely to logic chips, an area predominantly dominated by U.S. companies but difficult for China to quickly find alternative sources. — Qianer Liu, "China Quietly Drops 125% Retaliatory Tariff on Crucial U.S. Semiconductors," The Information, Apr 25, 2025
China imported roughly $11.7B of semiconductors from the U.S. in 2024 (U.S. customs data) — and far more from Taiwan and Korea.
Since "Made in China 2025," Beijing has poured state capital into the sector via the National IC Industry Investment Fund (the "Big Fund"), tax breaks and R&D programs. The strategy is showing results at mature nodes: SMIC's Q4 2025 profit jumped 23% on localization demand, and China now mandates that new capacity use at least 50% domestically-produced equipment. But the gap at the leading edge — especially EUV lithography and AI training chips — remains wide.
Washington's controls restrict advanced logic (≤16nm), advanced DRAM (≤18nm), high-layer NAND, HBM and the equipment to make them. The policy has whipsawed: after the Biden-era clampdown, the Trump administration moved in late 2025 to allow some sales (including Nvidia's H200) on a case-by-case basis, then in January 2026 added a 25% tariff on covered advanced AI chips. The most striking twist, though, came from Beijing's side.
The Information The Chinese government this week asked some tech companies to temporarily halt plans to buy Nvidia's H200 AI chips… throwing up a possible roadblock in Nvidia's hopes of restarting chip sales to one of its biggest markets. — Qianer Liu, "China Tells Tech Companies to Halt Nvidia H200 Chip Orders," The Information, Jan 7, 2026
Per the same report, officials are weighing whether to require firms to buy a set ratio of domestic AI chips alongside any H200 purchases — using Nvidia access as a temporary bridge while local champions (Huawei and others) catch up, without derailing the long-term self-sufficiency goal.
The Information China has ordered new data centers that receive state funds to use only domestically produced AI chips… data center projects less than 30% complete were told to remove foreign chips or cancel plans to buy them. — Qianer Liu, "China Bans Foreign AI Chips in State-Funded Data Centres," The Information, Nov 5, 2025
The directive threatens the China revenue of Nvidia, AMD and Intel while boosting domestic suppliers such as Huawei — even as broader trade tensions were easing.
| Company | Role | Status |
|---|---|---|
| SMIC | Leading foundry | 7nm (no EUV); flagship of the localization push; +23% Q4'25 profit |
| Huawei (HiSilicon / Ascend) | AI chips & design | Leading domestic AI accelerator; primary Nvidia alternative |
| Hua Hong / Nexchip | Mature-node foundry | Scaling auto/industrial capacity; Nexchip +24% '25 |
| YMTC | NAND memory | Advancing 3D NAND despite entity-list constraints |
| CXMT | DRAM memory | China's leading DRAM maker; closing the gap on legacy nodes |
| AMEC / NAURA | Equipment | Etch, deposition, cleaning — driving equipment localization |