Analyst Chris Miller argues China's core challenge is manufacturing, as it lacks the advanced lithography tools monopolized by ASML. The US and Taiwan are projected to produce 30 times more quality-adjusted AI chips, a gap unlikely to close soon.

Evaluating export controls by asking if China is still advancing is the wrong metric. The true test is the counterfactual: where would China be *without* the restrictions? The controls act as a significant handicap in a competitive race, not a complete stop, and it's highly likely China would be ahead of the U.S. in AI without them.

Blocked from buying advanced EUV lithography machines from ASML, China is not just trying to build its own. It's aggressively investing in "leap ahead" technologies like free electron lasers. This strategy aims to bypass the current generation of technology entirely, creating a new competitive front in the semiconductor war.

The most dangerous policy mistake would be reverting to a 'sliding scale' that allows China to buy chips that are a few generations behind the cutting edge. In the current era of AI, performance is aggregatable. China could simply purchase massive quantities of these slightly older chips to achieve compute power equivalent to frontier systems.

China will likely struggle to indigenously manufacture commercial DUV immersion lithography tools until the mid-2030s, long after domesticating deposition or etch tools. Because only Japan and the Netherlands produce them, lithography remains the West's most durable geopolitical lever.

Contrary to their intent, U.S. export controls on AI chips have backfired. Instead of crippling China's AI development, the restrictions provided the necessary incentive for China to aggressively invest in and accelerate its own semiconductor industry, potentially eroding the U.S.'s long-term competitive advantage.

The October 2022 chip export controls were intended to hobble China's AI progress and give the US a decisive strategic advantage. However, years later, the lead is estimated at a mere eight months for frontier models. The policy has not delivered the intended gap and shouldn't hinder collaboration on shared safety interests.

The US is attempting to close loopholes allowing China remote access to AI chips, but faces strong internal criticism. The core dilemma is that overly strict rules, like the proposed 'diffusion rule,' risk pushing unaligned nations to adopt Chinese technology, which could ultimately weaken America's long-term dominance in the global chip industry.

In 2022, China was adding 30-35% of the world's new AI compute. Due to U.S. export controls, that figure has now plummeted to below 10%. This creates a widening capabilities gap, with China projected to have less than 30 gigawatts of lower-quality compute by 2028.