China's AI Catch-Up Halted by Chip Shortage

China's AI industry has hit a chip shortage. The industry, which has been rapidly catching up with the United States, is now facing a shortage of semiconductors (chips) essential for AI development.

The Chinese government has announced a plan to resolve bottlenecks in core technologies by 2030. Yin Hejun, China's Minister of Science and Technology, said, "We will drive technological development across the entire chain in key sectors such as integrated circuits, clearing every blockage and bottleneck in the innovation process." China aims to broaden its scope of technological self-reliance through AI, quantum technology, and brain-computer interfaces, securing leadership in advanced technology by 2030.

Huawei has moved up the launch of its next-generation AI chip, the Ascend 960, and unveiled a roadmap to release a new AI chip every year through 2029 as it pursues chip self-sufficiency. Beyond Huawei, Chinese companies such as Kunlunxin and Cambricon are also linking large numbers of their own AI chips together to boost computing power.

China's demand for AI computing power is growing faster than its domestic chip production can increase. On top of that, supplies of high-bandwidth memory (HBM), essential for AI chips, are running short, even prompting Huawei and other Chinese AI chipmakers to raise prices.