The Soaring Cost of America's Failed Export Strategy

Washington woke the dragon. Huawei has fired its first salvo in the battle for AI supremacy, unveiling a roadmap that shatters the illusion that U.S. export controls can contain China’s rise and that the U.S. is the only option. The global race for AI supremacy is here.

In a rare public announcement last week, Huawei outlined four new generations of Ascend processors through 2028, along with an entirely domestic high-bandwidth memory (HBM) supply chain, precisely the area Washington sought to target with its latest restrictions. Far from stalling, China is accelerating and blazing past export controls.

Industry forecasts now project that Huawei will ship more than 800,000 Ascend chips this year, well above Washington’s estimates. All are produced on SMIC’s 7-nanometer node with a nearly self-sufficient supply chain. By 2026, Huawei is expected to produce 5 million Ascend 910C-class chips per year, making it a strong contender for second place in volume behind Nvidia, up from almost no shipments just a year ago.

U.S. policy assumed China’s semiconductor industry could be throttled indefinitely. Instead, sanctions forced Beijing inward, where it financed a full-stack alternative. Given these latest numbers, they've managed to pull it off, while we're still trying to figure out what to do with beleaguered Intel.

Initially, the reality is that neither Washington nor Beijing possesses an entirely domestic semiconductor supply chain; both rely heavily on Taiwan and the broader Asia region. The difference is that China chose offense, building aggressively, while the U.S. wasted time playing defense through restrictions.

Huawei’s memory partner, CXMT, is projected to produce 15% of global DRAM by 2026. On HBM, it has stockpiled older Japanese tooling, enough to enable domestic HBM production by the time its next generation of Ascend chips rolls out. SMIC, once viewed as a chokepoint, is scaling to 45,000 advanced-node wafer starts per month by 2025 and 80,000 by 2027. That’s millions of accelerators a year, built without Western fabs or IP. This is what happens when export controls are mistaken for strategy. It guarantees the outcome it is designed to mitigate.

Huawei understands this is a fight for footprint and adoption. Its roadmap isn’t just about chips but about distributed, low-cost compute clusters integrated into China’s dominant open-source ecosystem. The result is a parallel stack: made in China, for China, and for any nation beyond the U.S. orbit.

This is the cost of America’s failed export strategy. Restrictions designed to weaken Beijing have instead accelerated its independence. Washington debates whether to put Nvidia’s Blackwell on a control list; Beijing shrugs, bans Nvidia anyway, and marches toward self-sufficiency. Every delay cedes more of the global market to Huawei.

The U.S. can’t afford to sit back. Washington has already invested billions in Intel, while Nvidia has just matched the government's investment with expansions. That’s not enough. America should link foreign aid, trade deals, and defense partnerships to the adoption of the American AI stack, just as it does with steel, agriculture, or Boeing. Every Nvidia deployment abroad isn’t just a sale; it’s an act of allying with the U.S. over China.

America can’t win by denial or defense. The only viable strategy is platform entrenchment. We need to flood the world with U.S. hardware, software, standards, and enterprise until they are the default. Holding back Nvidia and other U.S. semiconductors doesn’t hurt Huawei. It only helps it.

We are entering the post-sanctions era of the chip war. Huawei is shedding reliance on U.S. manufacturing, and export controls now do more to alienate allies than to constrain adversaries. If America wants to lead, it must compete, export, and win.

China has declared war on the American AI stack. The question is whether Washington will rise to the challenge or retreat into failed policies and platitudes. The dragon has stirred. It’s time to put American industry on a war footing.