Cover Story: How U.S. Tech Blockade Sparked China’s AI Chip Boom

China’s homegrown AI chipmakers are experiencing an unprecedented boom as surging demand for computing power collides with U.S. export controls.

The sector has transformed into a sellers’ market, where securing production capacity essentially guarantees a steady flow of customers.

The scale of the crunch is staggering. In the first quarter, domestic AI computing power demand skyrocketed 417% year over year, far outpacing 128% growth in supply, according to the state-backed China Academy of Information and Communications Technology. The acute shortage forced leading AI model developers, including Z.ai, Moonshot AI and Alibaba Group Holding Ltd., to pause or limit new subscriptions for individual users between April and July.