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The US has held sway over the worldwide tech industry for many years. However, the World's Second Largest Economy seeks to change that situation.

The nation is investing substantial sums of funds into AI technologies and automated systems. Crucially, Beijing is also directing significant funding toward producing the high-end chips that power these cutting-edge technologies.

Recently, Jensen Huang warned that China was just "slightly trailing" the US in chip development.

Therefore, will Beijing equal US innovations and break its dependence on foreign high-end chips?

Following the DeepSeek Launch

China's DeepSeek created a stir through the tech world in last year when it introduced a competitor to OpenAI's ChatGPT.

This revelation by a little-known company was impressive for several reasons, not least because the company stated it cost much less to train than top artificial intelligence systems.

It was said to have been developed using far fewer high-end chips than its competitors, and its release temporarily sank Nvidia's market value.

And, progress in China's tech sector has grown. This year, some of the country's leading technology companies have made it clear that they plan to compete with Nvidia and become the primary advanced chip suppliers for domestic firms.

Earlier this year, Chinese state media announced that a recently unveiled processor developed by the tech giant Alibaba can rival the performance of Nvidia's H20 semiconductors while consuming less power. H20s are adjusted chips designed for the Chinese market under US export rules.

Huawei also unveiled what it described as its most powerful chips ever, along with a multi-year strategy to contest Nvidia's leading position of the artificial intelligence sector.

The Chinese tech giant also declared it would make its blueprints and software available to the public in the country in an attempt to pull companies away from their reliance on American technology.

Other Chinese chip developers have also secured major contracts with big businesses in the nation. One such company is providing high-end processors for organizations like state-owned telecoms operator a major Chinese carrier.

Another highly anticipated potential challenger to Nvidia is headquartered in Beijing Cambricon Technologies.

The company's stock have significantly increased in value over the last three months as investors bet that it will profit from Beijing's push for Chinese firms to use locally produced high-end chips.

The Tech Conglomerate Tencent, which operates the all-in-one platform its popular messaging service, is another prominent technology leader that has responded to the government’s call to use Chinese chips.

There has also been no lack of state-backed trade shows, showcasing Chinese technology companies in a bid to draw in investors.

"The competition has clearly arrived," a spokesperson for Nvidia commented in response to queries about the recent progress made by Chinese chip firms.

"Customers will select the most effective solutions for operating the world's most popular business software and publicly available AI systems. We'll continue to work to gain the confidence and backing of leading programmers everywhere."

However, some experts have warned that assertions made by China's semiconductor producers should be viewed skeptically due to a lack of open information and standardized performance measures.

China's semiconductors are comparable to the American chips in predictive AI but fall short in complex analytics, said computer scientist Jawad Haj-Yahya, who has evaluated both processors from the US and China.

"The gap is clear and it is certainly narrowing. But, I don't think it's something they will catch up on in the short-term."

Where China Leads - and Lags

On a industry discussion in last month, Nvidia's Jensen Huang highlighted the strengths of the Chinese technology industry, attributing its hardworking and vast talent pool, fierce local rivalry and progress in chipmaking.

"This is a dynamic entrepreneurial, advanced, contemporary sector," he remarked, encouraging the US to compete "for its survival."

His assessment is expected to be received positively by officials in Beijing.

China has consistently aimed to become a global leader in technology, in part to lessen its dependence on the Western nations.

Over time, China has poured significant resources into what President Xi Jinping calls "high-quality development", which includes industries from clean energy to artificial intelligence.

Even before the reappearance of Donald Trump to the White House, China had spent tens of billions of dollars as part of its efforts to transform its large economic system from the "global manufacturing hub" for basic products to a center of advanced sectors.

A continuing trade dispute with Trump's America has only made that mission more urgent.

The Chinese President has vowed to make his nation more independent and not depend on "external assistance."

The Nvidia CEO has also cautioned that the United States should engage in open commerce with the Asian nation or face the possibility of giving it the edge in the AI race.

This comes against a backdrop of Beijing exerting more pressure on Nvidia as it initiated an anti-monopoly probe into the firm last month.

However, the government-directed strategy can also be an barrier to creativity if all participants in the industry only focuses on a "common objective", said computing professor a technology scholar from National Taiwan University.

It can make it more difficult for innovative concepts to challenge conventions, she added.

The Chinese semiconductor sector has also not fully addressed concerns that its offerings can be less user-friendly than those of Western rivals like Nvidia.

Prof Yang believes these challenges can quickly be solved by China's huge number of skilled technology professionals.

"You cannot downplay China's ability to close the gap."

'China's Negotiating Tool

She characterized China's recent announcements about the semiconductor industry as a "bargaining chip" in its months-long trade discussions with the US.

Chinese officials aims to compel Washington into selling its advanced equipment or risk its position in such a significant economy, stated the analyst.

Such reports project strength on China's part, even though it is {