As the U.S. expands its export controls to limit China’s advancements in high-stakes tech sectors like artificial intelligence and semiconductors, Chinese tech giants such as ByteDance and Huawei are accelerating efforts to secure their positions. U.S. measures introduced restrict access to key semiconductor components, AI chips, and high-end cloud processing, leaving companies like ByteDance to seek creative workarounds while Huawei pushes its in-house operating systems and chip solutions to stay competitive.
Despite growing controls, ByteDance and Huawei are managing to expand their AI capabilities, and the efficacy of U.S. export sanctions in containing Chinese technology development remains a point of global concern.
ByteDance’s European Expansion and Global AI Network
To counter the impact of U.S. trade limits, ByteDance—owner of the social media powerhouse TikTok—plans opening a new AI research facility in Europe. This adds to ByteDance’s existing AI hubs across Asia, including a $2.13 billion AI center in Malaysia and the SIA Lab in collaboration with Tsinghua University. The European base is intended to deepen ByteDance’s access to top AI talent and capabilities in language modeling, an area essential for conversational AI applications.
ByteDance’s approach includes leasing Nvidia AI processors from Oracle’s U.S.-based cloud, a legal workaround to U.S. restrictions on direct sales of advanced chips to Chinese firms. These leased chips offer powerful processing for AI tasks without breaching export laws, allowing ByteDance to progress with its large language models (LLMs), which include Skylark—an LLM powering ByteDance’s content moderation. This model showcases how companies are sidestepping regulatory hurdles to maintain AI growth, highlighting potential gaps in the trade sanctions.
Huawei Completes Shift from Android to HarmonyOS
Huawei’s launch of HarmonyOS NEXT last week, an Android-alternative OS, marks its latest step to achieve technological autonomy from Western companies. This public beta release does not support Android apps and is now available on devices like the Pura 70 series and the MatePad Pro 11, but only within China. Built to function independently, HarmonyOS NEXT aims to reduce Huawei’s dependency on Google’s ecosystem, a necessity given U.S. sanctions.
The release coma on the heels of Huawei’s increased patent enforcement, as shown by a recent lawsuit against MediaTek for patent infringement on communication technologies. As Huawei solidifies its IP base, it also invests heavily in hardware alternatives, such as domestic collaborations with Semiconductor Manufacturing International Corporation (SMIC), which produced the 7nm chips used in its Mate 60 smartphone. Although SMIC’s chip manufacturing lacks the precision of industry leaders, this alliance signals Huawei’s commitment to reducing reliance on restricted U.S.-based technology.
Regulatory Backlash and New Data Security Measures
Alongside hardware restrictions, recent U.S. regulations now ban data brokers from selling personal data that could expose U.S. citizens to risks. Starting October 22, these rules prevent large datasets with sensitive identifiers from being transferred to foreign countries, including China. This restriction is a response to the security implications of big data in AI and cyber surveillance, which policymakers argue could endanger U.S. interests.
Other major tech players are responding to regulatory changes too: Microsoft cut off its Azure OpenAI access for most Chinese developers due to mounting controls. This shift removes a key resource for smaller companies and startups in China that previously relied on Azure’s cloud to access OpenAI’s models, narrowing their access to generative AI tools. With Microsoft’s exit, local Chinese companies like Baidu and Alibaba are positioning themselves as compliant alternatives, stepping up AI offerings amid a market left with fewer Western options.
TSMC Suspends Shipments to China’s Sophgo, Citing Huawei Ties
Taiwanese chip manufacturer TSMC recently suspended deliveries to Chinese firm Sophgo after identifying chips linked to Huawei’s Ascend AI products, an order flagged as potentially breaching U.S. controls. Sophgo denies any connection with Huawei and states its compliance with export regulations, though investigations by the U.S. Commerce Department are ongoing. This development draws attention to how U.S.-aligned companies like TSMC are enmeshed in the escalating trade restrictions, given their role as leading providers of semiconductor components to both American and Chinese tech firms.
TSMC’s unique position in the supply chain has grown more complex. Amidst these issues, TSMC is also expanding in the U.S. with Arizona-based facilities funded in part by a $6.6 billion government subsidy. This project aims to support U.S. semiconductor manufacturing but places TSMC in a delicate spot, as non-compliance with U.S. restrictions could jeopardize these American investments.
China’s Response: Bolstering Domestic AI and Semiconductor Resources
China’s own tech giants, Tencent and Alibaba, increased their investments in AI-focused hardware this year, a response to the growing need for alternatives to restricted U.S. technology. ByteDance also recently partnered with Broadcom to design a 5nm chip for AI tasks. This technology, which enables higher processing efficiency at a smaller scale, will be manufactured by TSMC, showing that Chinese firms are still able to innovate within regulatory boundaries while reducing dependency on the U.S.
In addition to hardware workarounds, Huawei has turned to SMIC, a Chinese semiconductor firm, to produce chips for new devices like the Mate 60. While SMIC’s chips lag behind the latest technologies from companies like Nvidia or TSMC, these chips underscore China’s urgency in establishing a self-reliant semiconductor sector. As such, U.S. lawmakers have increased scrutiny on Huawei and other Chinese firms, concerned that new capabilities may support defense and surveillance technologies.
Broader Implications of U.S.-China Tech Restrictions
The U.S.-China tech rivalry has drawn global attention, particularly as the Biden administration collaborates with allies to set strict limitations on AI chips and quantum computing technology. With the U.S. imposing its tech policies on countries like Japan, Taiwan, and the Netherlands, China has responded by doubling its domestic AI infrastructure spending. While the U.S. leads in generative AI technology, analysts estimate that China’s AI development may only trail by six months to two years, underscoring the high-stakes nature of this technological standoff.
As both countries prioritize AI as a linchpin for future dominance, the international implications of their rivalry are evident. The rapid response from Chinese tech companies to these U.S. controls indicates the evolving dynamics of global tech competition. For now, ByteDance and Huawei remain central to these shifts, as they push the boundaries of trade regulations to secure China’s foothold in the semiconductor and AI sectors.
Last Updated on November 7, 2024 2:16 pm CET
