China Responds to U.S. Sanctions with $8.2 Billion AI Investment Fund

  • China halts exports of gallium, germanium, antimony, and other critical minerals to the U.S.

  • Beijing launches a massive $8.2 billion AI investment fund as a countermeasure to U.S. sanctions.

January 21, 2025, 14:01 ET

Juan Carlos López

Senior Writer

An engineer by training. A science and tech journalist by passion, vocation, and conviction. I've been writing professionally for over two decades, and I suspect I still have a long way to go. At Xataka, I write about many topics, but I mainly enjoy covering nuclear fusion, quantum physics, quantum computers, microprocessors and TVs. LinkedIn

On December 2, the Biden administration announced a new wave of sanctions targeting 140 Chinese companies in the semiconductor industry. The bans focus on curbing access to lithography equipment essential for manufacturing advanced semiconductors.

In addition, the administration initiated an investigation into advanced integrated circuits produced in China, which are vital components in everything from household appliances to electric vehicles. Analysts anticipate that the conclusion of this investigation could lead to steep tariff hikes on Chinese-made semiconductors.

Strategic Countermeasures: Critical Minerals and AI Investment

China responded swiftly. Two days after the sanctions were formalized, Beijing announced a ban on exporting critical minerals such as gallium, germanium, and antimony to the U.S. These materials are crucial for the semiconductor industry and have military applications due to their extreme hardness.

More from Xataka On
Russian Products Are Gaining Popularity in China. Yet, Many of These Items Actually Originate From China Itself
This move aims to protect the development of its AI models from the latest sanctions imposed by the U.S. government.

This isn’t the first time China has used its control over rare-earth minerals as a geopolitical tool. On December 21, 2023, it restricted exports of certain rare earth processing technologies to safeguard its strategic interests amidst growing tensions with the U.S. and its allies.

However, in a bolder move to counteract U.S. sanctions, China has launched the National AI Industry Investment Fund, a $8.2 billion initiative aimed at advancing the country’s AI capabilities. The fund includes contributions from state-backed financial institutions such as Guozhi Investment and the China Integrated Circuit Industry Investment Fund Phase III.

This initiative underscores Beijing’s commitment to prioritizing AI systems development despite limited access to cutting-edge GPUs from Nvidia, AMD, and Intel. While Chinese firms rely on intermediaries and parallel import channels to obtain these components, they likely fall short of meeting the sector’s growing demands. AI technology remains a national priority for China, and the establishment of this fund demonstrates its resilience and strategic resolve to overcome the challenges posed by U.S. restrictions.

Image | Pavel Danilyuk

Related | The U.S. Is Set to Reopen an Antimony Mine That’s Been Closed for 30 Years in Response to Challenges Posed by China

See all comments on https://www.xatakaon.com

SEE 0 Comment

Cover of Xataka On

↑