<div id="readability-page-1"><p>China is facing a severe shortage of advanced computer chips after tighter U.S. export limits. The shortfall is so deep that Beijing is now stepping in to control how production from Semiconductor Manufacturing International Corporation (SMIC) is shared. Reports say Chinese officials are giving priority to Huawei Technologies, which uses SMIC's chips to power its AI products.</p><h3>Meet Your ETF AI Analyst</h3><ul><li> Discover how TipRanks' <i>ETF</i> AI Analyst  can help you make smarter investment decisions </li><li>   Explore ETFs TipRanks' users love  and see what insights the <b><i>ETF</i> AI Analyst</b> reveals about the ones you follow.</li></ul> <p>The lack of high-end chips is already hurting China's tech sector. Companies such as DeepSeek have delayed new AI models because of limited supply. In response, the Chinese government has asked state data centers to use domestic chips instead of foreign ones. Huawei's own Ascend chips are getting a major boost from this policy shift, helping the company expand its reach in cloud and AI computing.</p> <h2><strong>Industry Strain and Local Adjustments</strong></h2> <p>At the same time, Chinese engineers are rewriting code and reshaping their software to run on lower-power chips made at home. Factories are also trying workarounds to keep up. Some are combining several smaller chips to match the output of stronger ones, but this method raises power use and costs. Local governments have started to subsidize energy bills for these heavy systems.</p> <p>Analysts say SMIC's production remains limited by older tools, which create a high number of defective chips. Even with rising output, China still relies on U.S. and allied suppliers for the most advanced chipmaking equipment. As a result, production of efficient chips for AI and cloud services continues to lag behind the U.S.</p> <h2><strong>Global and Market Impact</strong></h2> <p>The restrictions have wide market effects. Major U.S. chip companies such as Advanced Micro Devices (AMD), Intel (INTC), Marvell Technology (MRVL), Microchip Technology (MCHP), Micron Technology (MU), Nvidia (NVDA), Qualcomm (QCOM), and Texas Instruments (TXN) all face reduced access to the Chinese market. While these firms benefit from U.S. policy support at home, they also lose one of their biggest customer bases abroad.</p> <p>Meanwhile, Huawei is expanding its AI chip output. Analysts expect it to ship more than one million chips this year and up to 1.6 million in 2026.</p> <h2><strong>Looking Ahead</strong></h2> <p>For now, U.S. companies keep their edge in chipmaking and design. Yet China's focus on self-reliance is pushing rapid local development. The global chip race remains intense, with both countries aiming to secure their positions in the growing AI economy.</p> <p>Using TipRanks' Comparison Tool, we lined up all the tickers from this piece side by side to gain a broader look at the semiconductor industry.</p></div>

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<p>China faces a severe chip shortage due to U.S. export limits, impacting companies like Huawei and SMIC. Beijing prioritizes Huawei for chip production, affecting China's tech sector. Local engineers adapt by using domestic chips and rewriting software. SMIC's production is limited by older tools, leading to defective chips. U.S. chip companies face reduced access to China, while Huawei expands AI chip output. The global chip race intensifies as China focuses on self-reliance in the AI economy.</p>

- China is experiencing a significant shortage of advanced computer chips due to stricter U.S. export limits, prompting government intervention in production distribution.  
- The Chinese government is prioritizing domestic chip use, particularly for Huawei, while companies like DeepSeek face delays in AI model development.  
- Despite efforts to boost local production, China still relies on U.S. suppliers for advanced chipmaking equipment, impacting its competitiveness in the global AI market.

China's Chip Shortage Deepens as U.S. Curbs Hit Huawei and SMIC