00:00Looking at the broader U.S.-China chip race, how quickly are Chinese companies closing the gap with the U.S.
00:06in terms of chip sophistication and performance?
00:09On the category of high-end frontier chips, the best estimates suggest that China's chip makers are about two to
00:16three generations behind, or at least five years behind.
00:18But if you then flip over to more of the mature older chips that are found in many electronics devices,
00:27the difference between China and the U.S. becomes quite marginal, maybe one to two generations at best.
00:35So it really depends on what kind of chips we're talking about and for what kind of use cases.
00:40Now, China would openly admit that it has this gap, but it's interesting to see that at the end of
00:47last year, in December 2025, China also introduced its own 50% rule.
00:52This is whereby they have asked Chinese companies to indigenise and for fabs to source about half of their equipment
01:00domestically and source the rest of their equipment internationally and on the global market.
01:04This is basically an admission that China is behind, that they're aware of the gap and that they will be
01:11using foreign equipment and product as needed in the short term.
01:15But longer term, they will not be deterred from moving towards full indigenous production end to end.
01:22The U.S. Commerce Secretary recently said that Nvidia's powerful H200 chips have not yet been sold to Chinese firms,
01:29even after the Trump administration lifted restrictions on them in January.
01:33Do you agree with the argument made by some officials that restricting sales helps slow Chinese competitors or could it
01:40instead accelerate China's push for chip self-reliance?
01:43I think you have to see all of this in a broader historical context of China's ambitions.
01:49China has had a concerted strategy of technology self-sufficiency for decades now.
01:55It is a strategy that far predates the Trump administration and far predates the latest export control action from the
02:02U.S.
02:03I think you're referring in particular to the former White House AI Czar David Sachs's comments, where he basically said
02:12that if we can get China addicted to U.S. chips, it will deter them from becoming more competitive and
02:18trying to make their own.
02:19Now, I certainly don't buy that argument if I look at the historical arc of what China is trying to
02:24achieve.
02:25China is not going to be deterred.
02:27Now, how will these conversations on AI chips influence the upcoming Trump-Xi meeting next month, where both sides want
02:34to see wins on trade?
02:35Now, the Match Act is just one of a raft of different export control measures being considered by committees in
02:42the U.S. Congress this month, just ahead of that Xi-Trump meeting.
02:47I do wonder whether this is intended in part to strengthen the U.S.'s negotiating position ahead of that conversation,
02:54or whether it might actually invite some more retaliatory action from China.
02:59We've seen over the past year that China is quite willing to weaponize its own strongholds on global supply chains,
03:08particularly its stranglehold on rare earths and magnets.
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