A new study by Epoch AI indicates that China would face more severe economic losses and higher costs than the United States in the event of a global semiconductor supply chain disruption. China remains heavily reliant on imported tools and materials for advanced chip production, a situation further complicated by existing US export restrictions.
The research identifies three critical bottlenecks in AI hardware: advanced logic wafers, CoWoS packaging, and high-bandwidth memory (HBM). Any failure in these areas would impact major industry players, including Nvidia, AMD, Google, and Amazon, which currently dominate the consumption of these components.
Data from an April 29, 2026, report suggests that between 290 000 and 1.6 million H100-equivalent chips were smuggled into China through 2025, with a median estimate of 660 000. These illicit imports are estimated to account for approximately one-third of China's total AI computing power.
While the US controls advanced design and fabrication, it maintains a dependency on China for electrical transformers used in data centers. Additionally, the economic stability of Taiwan and Hong Kong remains closely tied to the ongoing US-China chip standoff due to their high export dependence on AI-enabling goods.
