China is accelerating efforts to build its own advanced semiconductor capabilities while Chinese tech firms continue seeking access to Nvidia Corp’s (NASDAQ:NVDA) AI chips through overseas infrastructure.

China Advances Domestic 7-Nanometer Chip Technology

Hua Hong Group has reportedly developed a new 7-nanometer chip manufacturing technology that can support the production of artificial intelligence chips.

Its contract manufacturing arm, Huali Microelectronics, is preparing the process at its Shanghai facility, which could make it only the second Chinese chipmaker capable of producing chips at that level, alongside SMIC.

According to Reuters, Huawei is collaborating with Hua Hong on the 7-nm technology, while domestic equipment providers have supported development.

Beijing Pushes Chip Self-Reliance

Beijing has encouraged domestic companies to rely more on homegrown chip suppliers as it works to reduce dependence on foreign technology.

Restrictions have limited Chinese companies’ access to Taiwan Semiconductor Manufacturing Company Ltd’s (NYSE:TSM) manufacturing services and constrained the supply of advanced AI chips from companies such as Nvidia.

These pressures have pushed Beijing to accelerate the development of its own semiconductor ecosystem.

Chinese Firms Seek Nvidia Chips Through Overseas Data Centers

At the same time, Chinese tech companies are expanding AI infrastructure outside China to access Nvidia hardware despite export restrictions.

Reports indicate that ByteDance plans a large AI deployment in Malaysia through its cloud partner, Aolani Cloud, involving about 500 Nvidia Blackwell systems, or roughly 36,000 B200 chips.

Demand for Nvidia chips from Chinese companies remains strong. Firms have reportedly ordered more than 2 million H200 chips for 2026, exceeding Nvidia’s current supply capacity.

Nvidia has asked Taiwan Semiconductor to increase production to meet demand, though some manufacturing capacity is shifting toward its next-generation Vera Rubin hardware.

NVDA Price Action: Nvidia shares were up 1.81% at $183.52 during premarket trading on Monday, according to Benzinga Pro data.

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