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DeepSeek, Huawei, and how the US has struggled to limit Chinese tech

Updated Jan 29, 2025, 4:00pm EST
tech
Gonzalo Fuentes/Reuters
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The Scene

Smartphone maker Huawei serves as a cautionary tale on limiting Chinese technology, as a similar debate reignites with DeepSeek’s advancements in cheap and efficient AI.

Years of tightening US government restrictions targeted Huawei and its global supply chain — intended to impede China’s growing tech prowess. The first Trump administration added Huawei and dozens of its affiliates to the Entity List, limiting the company’s access to technology from the US and its allies. The Biden administration continued this work, tightening controls around chip exports. Huawei’s customer base shrank and its sales tanked, but it has since thrived on diversifying its offerings and expanding its presence domestically.

Huawei hasn’t yet announced its full 2024 earnings results, but it posted big year-over-year gains during the first nine months. It has reduced its reliance on US tech by expanding its business to cloud, software, and electric vehicles. It also launched a new operating system and phone in 2024 that are hugely popular in China.

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Step Back

The launch of DeepSeek’s reasoning model sent AI companies spiraling because the Chinese model was able to outperform those of top US companies on benchmark tests at a fraction of the cost.

In recent years, US tech firms have focused on semiconductor spending and building massive infrastructure projects on the promise it is necessary for AI development. Meanwhile, the sanctions may have had the unintended consequence of forcing Chinese companies to operate more efficiently without access to US chips and other components.

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