Nvidia’s Chief Says U.S. Chip Controls on China Have Backfired

Lawmakers in Washington have worked for years to limit China’s access to the cutting-edge computer chips needed for advanced artificial intelligence, particularly those made by Nvidia, America’s leading chipmaker.

But according to Nvidia’s chief executive, Jensen Huang, those regulations, driven by economic and security concerns, have only made Chinese tech companies stronger.

The export controls on chips forced Nvidia to forfeit its dominant position in China while domestic companies like Huawei, the telecommunications giant, filled the gap, Mr. Huang said at a news conference in Taipei, Taiwan’s capital, on Wednesday.

Washington’s efforts gave Chinese companies “the spirit, the energy and the government support to accelerate their development,” said Mr. Huang, who attended a tech conference in Taipei this week. “All in all, the export control was a failure.”

Beginning in 2022, under former President Joseph R. Biden Jr., the U.S. government imposed rules to curb the export of Nvidia’s most powerful chips to China. Nvidia responded by modifying one type of chip, making it less powerful so it would fall below the government’s performance thresholds. Last month, Nvidia disclosed that U.S. officials were requiring a license for future sales of those chips to China, forcing the company to take a $5.5 billion hit on inventory it had already planned to sell.

Although Huawei’s chips cannot do everything that Nvidia’s can, they work well enough to help Chinese companies provide A.I. services to people and businesses. In recent months, the government in Beijing has been pushing companies to stock their veri centers with mostly Chinese-made chips.