The evolving landscape of technology and trade necessitates ongoing vigilance from the U.S. to maintain effective export controls, especially as China rapidly improves its AI chip capabilities.

The U.S. has assessed that Huawei can produce a maximum of 200,000 advanced AI chips in 2025, according to Jeffrey Kessler, Under Secretary of Commerce for Industry and Security.

Kessler reported this figure during a congressional hearing, highlighting ongoing concerns regarding Huawei's impact on national security, as most of these chips are expected to be supplied to Chinese companies.

SMIC is hindered by a lack of access to advanced photolithography machines manufactured by ASML, essential for producing the most advanced chips efficiently, as ASML holds a monopoly on these machines.

U.S. export controls implemented since 2019 have limited Huawei's access to advanced U.S. chips and production equipment, significantly affecting its market position and forcing it to rely on Semiconductor Manufacturing International Corp. (SMIC), which is still behind TSMC in technology.

Despite its limited production capacity, Huawei's chip design capabilities, particularly in its Ascend series, are competitive with Nvidia's offerings in China.

Recent U.S.-China trade discussions in London resulted in a tentative truce, although trade tensions continue over issues like mineral exports from China.

China is investing heavily in developing its own lithography machines but is estimated to be a decade away from matching ASML's capabilities, which limits Huawei's production capabilities.

Kessler reassured that while no immediate new restrictions on U.S. semiconductors to China are planned, the Commerce Department will continue to monitor and adapt export controls as necessary.

Huawei's CEO Ren Zhengfei acknowledged that their chips are a generation behind U.S. competitors, but the company invests over $25 billion annually to enhance chip performance.

White House AI Czar David Sacks indicated that while China's AI development is lagging by only 3-6 months behind the U.S. in AI models, Chinese chips are one to two years behind U.S. technology.

The hearing serves as a reminder of the tensions between the U.S. and China in the technology sector, particularly concerning artificial intelligence and telecommunications.