China Races To Close AI Tech Gap With US As Huawei Ramps Up Domestic Production

Despite facing strict US export controls, China is accelerating efforts to close the gap with the United States in artificial intelligence (AI) technology, a top US official warned on Thursday.

Jeffrey Kessler, United States' Under Secretary of Commerce for Industry and Security, told US lawmakers that Chinese tech giant Huawei could produce up to 200,000 advanced AI chips in 2025—well below its domestic demand—but said this number should not be misunderstood as a sign of comfort.

“China is investing huge amounts to increase its AI chip production, as well as the capabilities of the chips that it produces,” Kessler told the US House Foreign Affairs Subcommittee on South and Central Asia, news agency Reuters reported.

“It’s critical for us not to have a false sense of security… China is catching up quickly," he added.

The warning comes amid intensifying US-China competition in next-gen technologies, with AI seen as a strategic frontier.

Since 2019, Washington has imposed sweeping export restrictions on Chinese firms, cutting them off from high-end semiconductors and manufacturing tools in an effort to blunt Beijing’s tech and military ambitions.

Yet those same restrictions are now forcing Chinese firms to develop homegrown alternatives.

Huawei’s Ascend 910C AI chips, while a generation behind US tech giant Nvidia’s products, are positioned as a domestic solution.

The company reportedly plans to ship most of its 2025 output to Chinese customers.

"Our assessment is that Huawei Ascend chip production capacity for 2025 will be at or below 200,000 and we project that most or all of that will be delivered to companies within China," Kessler said.

White House AI adviser David Sacks said earlier this week that China’s AI models trail the US by just 3–6 months.

The White House later clarified that China’s AI chips still lag the US by one to two years.

Huawei’s founder Ren Zhengfei confirmed the technological lag in an interview with Chinese state media but said the company is spending over $25 billion annually to bridge the gap.

Nvidia, meanwhile, has been hit by US curbs that bar exports of its most powerful chips to China, allowing Chinese alternatives to gain ground in domestic markets.

While a tentative trade truce between the US and China was reached this week in London, the technological standoff remains unresolved.

Kessler said no new chip export restrictions are imminent, but emphasised ongoing vigilance.

“It’s a constantly evolving landscape, and we need to make sure that our controls remain effective,” he said.

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