Chipping away: Nvidia CEO predicts a long journey for US chip independence

• Nvidia CEO: US supply chain independence in 10-20 years, impractical in the immediate future.
• Company actively developing products tailored to the Chinese market.
• Where does this declaration leave Washington’s attempts to choke China’s supply chain?

The issue of whether the US can attain independence in its chip supply chain looms large in 2023. The web of dependencies and the vital role of semiconductors in many industries underscore the significance of the issue. Jensen Huang, the CEO of Nvidia, says it will take the US up to 20 years to achieve chip independence from China.

Addressing an audience at the New York Times‘ DealBook Conference, Huang described the global nature of his company’s products, highlighting their dependence on various components manufactured worldwide, not just Taiwan. “We are somewhere between a decade and two decades away from supply chain independence,” he said. “It’s not a really practical thing for a decade or two.”

That indicates a lengthy journey for the Biden administration’s goal of reshoring more of the chipmaking industry to the US – certainly longer than the President himself can constitutionally hope to be in office. The President has advocated for bipartisan legislation to establish domestic manufacturing facilities. Several major companies, including Taiwan Semiconductor Manufacturing (Nvidia’s key manufacturing partner), Samsung, and Intel are planning to expand in the US.

The US has a challenge in reducing its reliance on overseas chipmaking as the world experiences semiconductor shortages and geopolitical shifts. From policy considerations to technological innovations, the endeavor is multifaceted. Europe aims to make its domestic industrial capacity more self-sufficient yet recognizes self-sufficiency may be unattainable.

As Ursula von der Leyen, President of the European Commission, said in her remarks introducing the EU Chips Act: “It should be clear that no country—and even no continent—can be entirely self-sufficient.”

In a 2023 Semiconductor Industry Outlook report by Deloitte, analysts say that replicating the capabilities of Asian manufacturing won’t be easy. “Until the supply chain, pandemic, and trade issues surfaced, Asia had secured a supply of raw and manufactured materials to make hundreds of components. Replicating and building that model in multiple geographically unconcentrated new locations would likely take years or even decades,” the report reads.

The CEO of Nvidia is committed to China

Huang reiterated Nvidia’s commitment to China, which remains the most significant chip market. Recently, the company has faced restrictions on selling its most advanced AI processors to China following export limitations imposed by the US government – strictures that were further tightened just last month.

The US chip giant was reportedly set to develop another collection of customized AI chips for the Chinese market following the prohibition of its A800 and H800 GPUs under the October update to Washington’s export control regulations.

“We have to come up with new chips that comply with the regulation, and once we comply, we’ll go back to China,” he said at the conference. “We try to do business with everybody we can. On the other hand, our national security matters. Our national competitiveness matters.”

Nvidia was cautious in its third-quarter earnings report on November 21, anticipating adverse effects from US export controls in Q4. Nvidia has faced escalating export controls that have constrained its capacity to supply its most advanced GPUs to China. Huang acknowledged that China might discover a means to acquire the technology or try to motivate its domestic chipmakers. 

He emphasized that Nvidia maintains a decade’s lead over such companies, explicitly mentioning the sanctioned Chinese manufacturer, Huawei.

Huang’s comments, which also encompassed AI, made news around the world.

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