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America has held sway over the worldwide tech industry for decades. But, the World's Second Largest Economy wants to transform that landscape.

The nation is allocating substantial sums of funds into artificial intelligence (AI) and automated systems. Significantly, Chinese authorities is also channeling significant funding toward developing the high-end chips that power these cutting-edge technologies.

Last month, Nvidia's CEO cautioned that the Chinese semiconductor industry was only "close behind" the US in chip development.

So, will China equal American technology and reduce its reliance on foreign advanced processors?

After DeepSeek

China's DeepSeek made headlines through the tech world in 2024 when it introduced a competitor to the widely-used AI chatbot.

This revelation by a little-known company was impressive for multiple factors, including because the company stated it required less funding to train than top artificial intelligence systems.

It was said to have been created using significantly less high-end chips than its rivals, and its debut caused a drop in Nvidia's market value.

Moreover, progress in the Chinese technology industry has continued. This year, some of the country's leading technology companies have declared that they aim to take on Nvidia and become the main advanced chip suppliers for local companies.

In September, Chinese state media announced that a new chip developed by Alibaba can rival the performance of Nvidia's H20 chips while using less energy. H20s are modified processors designed for the China under US export rules.

Huawei also introduced what it called its most powerful chips ever, along with a three-year plan to contest Nvidia's leading position of the artificial intelligence sector.

The Chinese tech giant also announced it would release its designs and software available to the general audience in the country in an attempt to draw companies away from their reliance on US products.

Other Chinese chip developers have also secured major contracts with large corporations in the country. MetaX is supplying advanced chips for organizations like government-run telecommunications firm China Unicom.

Another highly anticipated potential challenger to Nvidia is headquartered in Beijing a rising semiconductor firm.

Its Shanghai-listed shares have more than doubled in value over the last three months as market participants speculate that it will profit from the government's initiative for domestic companies to use locally produced high-end chips.

Tencent, which owns the super app WeChat, is an additional prominent technology leader that has heeded the official directive to use domestic processors.

There has also been no lack of state-backed events, showcasing Chinese technology companies in a bid to draw in funding sources.

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

"Customers will select the best technology stack for running the globally dominant business software and publicly available AI systems. We'll persist in our efforts to gain the confidence and backing of mainstream developers everywhere."

However, some experts have cautioned that claims made by Chinese chipmakers should be viewed skeptically due to a absence of publicly available data and consistent testing benchmarks.

China's semiconductors are comparable to the US in predictive AI but fall short in complex analytics, said tech expert Jawad Haj-Yahya, who has tested both American and Chinese chips.

"The difference is clear and it is surely shrinking. But, it is unlikely they will close it in the near future."

China's Strengths and Weaknesses

On a technology and business podcast in last month, the CEO of Nvidia emphasized the strengths of the Chinese technology industry, attributing its hardworking and large workforce, fierce domestic competition and advancements in chipmaking.

"It represents a vibrant innovative, advanced, contemporary sector," he remarked, encouraging the US to vie "to maintain its position."

This evaluation is likely to be received positively by officials in the Chinese capital.

China has long vied to become a global leader in technology, partly to lessen its dependence on the Western nations.

For years, China has invested heavily into what President Xi Jinping calls "advanced growth", which includes industries from clean energy to artificial intelligence.

Prior to US President Donald Trump's return to the White House, China had allocated tens of billions of dollars as part of its efforts to transform its large economic system from the "world's factory" for standard goods to a center of advanced sectors.

A continuing trade dispute with the United States under Trump has only rendered this goal more pressing.

Xi has vowed to make his country more independent and not rely on "external assistance."

The Nvidia CEO has also cautioned that the United States should trade freely with the Asian nation or face the possibility of giving it the advantage in the AI race.

This comes against a context of Chinese authorities exerting more pressure on Nvidia as it initiated an investigation into market dominance into the company recently.

However, the government-directed strategy can also be an obstacle to creativity if everyone in the industry only focuses on a "shared goal", said academic expert Chia-Lin Yang from a leading educational institution.

This may make it more difficult for disruptive ideas to challenge conventions, she commented.

China's chip industry has also not fully addressed criticism that its offerings can be less user-friendly than those of Western rivals like the industry leader.

Prof Yang thinks these issues can quickly be resolved by China's huge number of skilled technology professionals.

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

'Bargaining Chip' for China

The expert characterized China's recent announcements about the semiconductor industry as a "negotiating tool" in its extended trade discussions with the US.

Chinese officials seeks to compel Washington into providing its high-tech tools or lose its standing in such a large market, stated the analyst.

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