Remember those tough export controls on China’s chip industry? It seems they’re finding a way around them! David Sacks warns that Chinese semiconductor factories are surging back, especially in AI, threatening to compete globally. Is America’s tech lead in jeopardy as their chip production triples?

A significant shift in the global technology landscape is underway as Chinese semiconductor manufacturers exhibit a remarkable resurgence, challenging previous assumptions about the effectiveness of export controls. This dramatic comeback, particularly in the critical artificial intelligence sector, has prompted stark warnings from figures like David Sacks, a White House-appointed “Crypto Czar,” who points to new production data indicating a planned tripling of AI processor output by China’s chipmakers.

Sacks, a prominent voice in tech and policy discussions, took to X to highlight the accelerating pace of production from key Chinese companies such as Huawei, SMIC, and Cambricon. He emphasized that these firms are not only expanding rapidly but are also poised to directly compete with American-made chips on a global scale, referencing a Financial Times report that detailed China’s aggressive capacity expansion efforts in this strategic domain.

The push for advanced AI processing capabilities is underscored by the imminent launch of three new fabrication plants, specifically dedicated to the production of AI chips. According to sources cited by the Financial Times, one of these facilities is slated to begin production by the end of the current year, with the remaining two expected to come online in 2025. These state-of-the-art plants are designed to manufacture Huawei’s proprietary processors and other advanced integrated circuits compatible with standards promoted by DeepSeek, China’s leading artificial intelligence startup.

Further compounding the concerns, SMIC, recognized as China’s premier foundry, has ambitious plans to significantly boost its 7-nanometer chip capacity. The company aims to double this critical production next year, a move that signals a rapid advancement in its technological capabilities. When fully operational, the combined output from these new fabrication plants could potentially surpass SMIC’s existing production lines for similar advanced semiconductors, marking a substantial increase in domestic chip manufacturing power.

While acknowledging the efficacy of past measures, Sacks attributed the current lag in Chinese chip technology, relative to the U.S., to the “far-sighted decision” made during President Donald Trump’s first administration to restrict China’s access to extreme ultraviolet (EUV) lithography tools. This crucial export control measure effectively stalled their progress in producing the most advanced semiconductors, buying valuable time for American innovators.

However, Sacks expressed strong criticism for other U.S. policies, characterizing them as counterproductive to American strategic interests. He argued that certain governmental actions risked inadvertently pushing international partners “into the arms of China,” thereby undermining collaborative efforts and weakening the collective stance against China’s technological ambitions. This underscores the delicate balance required in global technology policy.

In a direct appeal, Sacks urged the U.S. government to actively support American AI companies, emphasizing the urgent need to ensure their victory in what he described as a global competition for technological supremacy. He stressed that a robust domestic AI industry is paramount for maintaining national security and economic leadership in the evolving digital age, warning against complacency.

The financial prowess behind China’s semiconductor surge is also notable. Cambricon successfully raised approximately $600 million this year, while four other prominent Chinese AI chipmakers, including DeepSeek, are reportedly seeking initial public offerings (IPOs) after collectively securing $3 billion in funding. This significant investment, coupled with a surge in Chinese semiconductor stocks following DeepSeek’s announcement of new chip-optimized standards, as reported by the FT, illustrates a robust and well-funded ecosystem driving China’s rapid technological growth.