The China AI Stack

The Thesis

Washington’s export controls were meant to restrict China’s access to frontier-AI compute. The result in this record is not a clean split. Domestic fabrication has improved but remains constrained; Chinese firms still seek Nvidia chips, foreign lithography tools, and compute outside China. Models built on top of that mixed supply chain now have Hong Kong and Shanghai tickers through which policy and product news can hit prices.

TEXXR tracks dated restrictions, chip teardowns, model releases, and listings. The useful question is not whether China has an independent AI stack. It is which parts it can supply, which parts it must still reach through other routes, and which listed companies absorb a change in either.

The Evidence

Start with two different denominators. TechInsights’ self-sufficiency series measures China’s broader chip supply (TEXXR #879496). The New York Times estimate concerns global AI-chip production: despite more than $150 billion invested over more than a decade, it put China’s expected 2026 share at 2% and its memory output roughly 70 times below foreign chipmakers’ (TEXXR #1163482). Rising chip self-sufficiency does not establish self-sufficiency in frontier AI hardware.

The fabrication trail shows both progress and a ceiling. A 2023 TechInsights teardown found SMIC’s 7nm chip in Huawei’s Mate 60 Pro (TEXXR #843789); Washington planned tighter rules that October to close export-control workarounds (TEXXR #845208). The December 2024 teardown found the next Mate flagship still on 7nm, not the rumored 5nm node (TEXXR #880228). By December 2025, TechInsights found an updated 7nm process in the Mate 80 Pro Max, again made by SMIC (TEXXR #893605). Reuters reported in March 2026 that Hua Hong was preparing a second domestic 7nm line with Huawei’s help, not that the line was already producing chips (TEXXR #1165295).

An installed tool base complicates the idea of a sealed supply chain. The Center for Technology & Statecraft tally, reported October 4, puts Chinese fabs at about 343 deep-ultraviolet immersion tools by early 2026, about 270 of them from ASML. Tom’s Hardware’s October 5 account instead describes 343 as ASML imports from 2012 to early 2026. The two accounts assign different denominators to ASML; neither documents an increase in installed tools between the reports. Such tools can be adapted to make 7nm chips and high-bandwidth memory; the tally does not establish production yields or a 5nm capability. In a September interview, ASML CEO Christophe Fouquet described a supply chain spanning about 2,000 companies. Tool ownership and the ability to keep producing with those tools are different tests.

SMIC’s regulatory and commercial records also resist a single label. On March 27, 2026, US officials alleged it had shipped chipmaking tools to Iran’s military; the US has sanctioned it over alleged Chinese military ties (TEXXR edge #235221, #235220). A week later, SMIC and domestic peers reported record 2025 revenue, attributed to AI demand and the self-sufficiency push (TEXXR edge #236016, #236069). A sanction did not erase the reported sales; record sales did not resolve the allegation.

Models supplied the first sharp market test. DeepSeek began as the research arm of quant hedge fund High-Flyer, whose founder Liang Wenfeng directed a stock of Nvidia chips into the project, according to Wired (TEXXR #881756). On January 27, 2025, its R1 release coincided with declines of more than 17% for Nvidia and 14% for TSMC, roughly 6% each for AMD and ASML, and about 3% for Microsoft, as reported by the Financial Times (TEXXR #881778). CNBC measured Nvidia’s loss at nearly $600 billion in market value, more than twice the prior US one-day record (TEXXR #881811). SemiAnalysis estimated DeepSeek had spent well over $500 million on GPUs; TechInsights argued that the competitive problem fell more directly on model vendors such as OpenAI than on Nvidia (TEXXR #881804). A cheaper-looking model was not evidence of a chip-free model.

The import rules then changed faster than factories could. After Washington cleared the China-specific H20 in mid-2025, Nvidia ordered another 300,000 from TSMC, on top of a reported 600,000–700,000 units in inventory (TEXXR #888414). Weeks later, Beijing urged firms to avoid H20 over alleged security concerns and Nvidia told suppliers to stop production (TEXXR #889331). In January 2026, the US moved H200 and AMD MI325X sales to case-by-case licensing (TEXXR #1161412); Reuters’ sources said China approved a first batch of more than 400,000 H200s for ByteDance, Alibaba, and Tencent (TEXXR #1162278). In June, the US was still holding off on entity-list additions for DeepSeek, memory maker CXMT, and more than 100 other flagged firms (TEXXR #1171059). A September report said Beijing had asked Alibaba, ByteDance, and others for plans to buy Nvidia RTX Pro 5500 chips and intended to approve them. An intention is not an approval.

Access can also sit outside an import ledger. Financial Times sources said Tencent signed an approximately $7 billion, five-year Oracle lease in 2026 for access to about 100,000 advanced AI chips in Southeast Asian data centers. That is a reported arrangement, not a Tencent-confirmed chip purchase or evidence that those chips entered China. For physical trade, Bloomberg reported that Hong Kong handled more than half of China’s $239 billion in chip imports in the first five months of 2026, versus roughly one-third a decade earlier (TEXXR #1172071).

The equity route is visible too. Hong Kong’s Hang Seng gained 28% in 2025, its strongest year since 2017 (TEXXR #1154342); PwC counted 76 mainland listings, against 30 in 2024 (TEXXR #1166133). Biren’s January 2 debut followed a $717 million raise: up as much as 119% intraday and 76% at the close (TEXXR #1154374). Zhipu listed January 8, raised roughly $560 million, and closed up 13% (TEXXR #1154745). MiniMax raised $619 million and closed its January 9 debut up 109%, CNBC and Bloomberg reported. In February, model-release trading took Z.ai up nearly 30% on GLM-5 and MiniMax up 13.7% on M2.5 (TEXXR #1163286). By April, Bloomberg counted recent AI listings among five of Asia’s ten most volatile stocks (TEXXR #1166297). Those are price observations, not proof that the businesses gained value at the same rate.

Private marks disagree. The Information’s sources put DeepSeek’s June round at about $7.4 billion, at a valuation above $50 billion (TEXXR #1170968). July talks pointed toward $71 billion (TEXXR #1172591); an unrelated investor’s filing implied about $52 billion for an indirect 0.83% stake (TEXXR #1173169). A financing price, proposed terms, and an implied mark are not interchangeable. Bloomberg reported voting rights in the round for China’s National AI Industry Investment Fund, not for Tencent or JD (TEXXR #1173219), then a funding pause on July 25 after comments attributed to Liang Wenfeng circulated online (TEXXR #1173716).

The mainland market supplied another price test. CXMT’s July 27 Shanghai debut was for a memory maker, not a Hong Kong model vendor. It overtook Tencent at a reported roughly $524 billion market value about two weeks after its debut; that is a later mark than the one below. On September 11, 2026, Enflame closed its Shanghai debut up 188% after raising about $910 million, at a $26.3 billion market cap.

Model releases remain contested evidence, not just launch events. Moonshot’s July 16 Kimi K3 had 2.8 trillion parameters (TEXXR #1173102); VentureBeat reported a lead over Claude on one coding benchmark and a score within a point of GPT-5.6 Sol on another (TEXXR #1173210). A week later, OSTP Director Michael Kratsios alleged Moonshot had distilled Anthropic’s Fable for K3 (TEXXR #1173513); Commerce opened a probe into Chinese firms’ access to advanced US training chips (TEXXR #1173574). Bloomberg then reported plans for a downloadable release under a bespoke license, rather than a standard permissive one (TEXXR #1173800). Separately, Financial Times sources said ByteDance was pretraining a model of up to 10 trillion parameters—about 3.6 times K3’s count, derived from the reported figures—not that it had released one (TEXXR #1174524).

The Companies

Chips. SMIC (0981.HK) is China’s largest foundry. Cambricon (688256.SH) designs training and inference chips: H1 2025 revenue was 44 times the year-earlier period (TEXXR #889494), while its first profitable full year brought $316 million in 2025 net income (TEXXR #1162564). Hua Hong (1347.HK) is the prospective second 7nm foundry. MetaX’s Shanghai debut came in December 2025, before Biren’s Hong Kong listing (TEXXR #893782). Enflame is another Shanghai-listed chip designer. CXMT (688825.SH) makes DRAM. Different products, exchanges, and production constraints sit behind the shorthand “China AI chips.”

Models. DeepSeek and Moonshot remain private in this record. Zhipu trades as Z.ai (02513.HK); MiniMax Group trades as 0100.HK. The Financial Times grouped Zhipu, Moonshot, MiniMax, and 01.ai as model challengers back in 2024 (TEXXR #864373). Their methods are disputed: Anthropic alleged in February 2026 that DeepSeek, MiniMax, and Moonshot had used more than 16 million Claude prompts to train their models (TEXXR #1163960). That is Anthropic’s allegation, not an established finding about each model.

Applications. Alibaba and Baidu have begun using internally designed chips for some model training in place of Nvidia hardware (TEXXR #890106); Alibaba’s inference chip also targets work served by H20 (TEXXR #889581). On distribution, Alibaba’s ModelScope said in March it hosted 170,000 models, Rest of World reported, against more than 20,000 on rival MoArk. Hosted models are not a measure of use. MiniMax priced its M3 at $0.12 per million input tokens, against roughly $5 for Claude Opus 4.7 (TEXXR #1169983). Neither distribution nor a lower token price establishes profit: Bloomberg reported Baidu’s fifth consecutive quarterly sales decline in August 2026, down 4% and below estimates (TEXXR #1175168).

The Lenses

Robert Shiller. A listing gives a model story a price, and a subsequent release gives traders another date on which to retell it. Shiller’s Irrational Exuberance recalls 1999, when “conversations about the stock market were everywhere.” The January debuts and February release-day moves establish a sequence; they do not establish whether either company was fairly priced. Keep the story and the cash flows on separate screens.

Benjamin Graham. Cambricon tests the separation of price from reported business results. Its shares gained 383% in 2024 (TEXXR #880838); Bloomberg measured a gain above 765% over two years by late 2025 (TEXXR #892639; edges #86845, #86844, #95114). Its first annual profit arrived for 2025. Graham’s margin-of-safety test would require a business valuation, not an inference that the earlier gain was either justified or unjustified.

What Moved

As of October 26, China’s chip demand has moved from plans to orders, and from H200s to workstation cards. Reuters’ October 20 sources say ByteDance, Alibaba, and Tencent ordered more than 3 million Nvidia RTX PRO 5500 GPUs, worth over $35 billion, in a rush for less powerful, export-compliant chips. The baseline is smaller. After January’s reported approval of a first batch above 400,000 H200s, Financial Times sources said by August 19 Beijing had let ByteDance and Tencent bring in about 10,000 each. On October 13 the FT reported that Chinese firms had bought more than 1 million Nvidia gaming and workstation chips, mostly RTX 5090 and RTX Pro, for basic AI work. IDC, via Reuters, put Nvidia’s share of China’s data-center AI chip market at 34% in the first half, with shipments down 44% from a year earlier to 678,000. Orders do not establish Chinese import approval, delivery, or domestic chip production. An October 20 FT report describes Alibaba, Tencent, and Huawei investing in data centers in Shaoguan.

Three control-side items point different ways. Politico’s sources say OpenAI has retreated from advocating strict export controls on US chipmakers selling to China, in line with President Trump; TEXXR does not record what it urged before. Israeli security firm Lava found 32 Nvidia B300 chips connected to systems linked to China Telecom, despite US controls, according to The Information. A link to a system does not show who runs the chips, and 32 does not measure the leak. On October 22 Treasury proposed a rule to restrict US high-tech investment, including AI and supercomputing, in China and other countries of concern, AP reported. It would cover American capital going out, not chips coming in.

The model-export gate moved separately. Bloomberg’s October 23 report, citing Chinese state media, says DeepSeek and MiniMax completed registration and won approval to open-source and deploy models overseas under proposed export controls. SemiAnalysis describes DeepSeek and Huawei as mutually reliant: Huawei supplies compute hardware, DeepSeek supplies model workloads and kernel optimizations. The Information’s sources said DeepSeek plans to start pre-training on Huawei’s Ascend 950DT as soon as the end of 2026. Bloomberg’s October 22 sources put DeepSeek’s latest round at roughly $15 billion, with CATL and Tencent among the biggest contributors, against The Information’s reported $7.4 billion June round; neither figure is a valuation.

TSMC is still the foreign-capacity check. TSMC reported Q3 2026 revenue of $46.72 billion, up 41.2% in dollars, and net income up 68.7% in Taiwan dollars. (Corrected 27 October: figures.) A Seoul newspaper, via Reuters, says Nvidia asked Samsung, SK Hynix, and Micron to use TSMC’s 3nm process for NVHBM memory base dies; Samsung agreed. (Corrected 27 October: source.) That is not a report of shipped memory. TSMC’s additional 3nm fab in Tainan targets production in H1 2028, not current capacity.

• 2026-09-11Enflame's Shanghai debut closed up 188% after a roughly $910 million IPO, giving the Tencent-backed chipmaker a $26.3 billion market cap.
• 2026-09-09The NSA, FBI, and CISA alleged that DeepSeek, Moonshot, and Alibaba conduct distillation “at an industrial scale” (Reuters).
• 2026-09-08The Financial Times reported that Huawei is investing in domestic lithography suppliers and helping them secure DUV-component deals with fabs including SMIC (FT).
• 2026-09-03Saudi Arabia's Humain launched humain-m3, an Arabic-language model developed with MiniMax (Bloomberg). (Corrected 27 October: date.)
• 2026-08-28Tencent released Hy4 Preview, an open 770-billion-parameter model with a 1-million-token context window (Bloomberg). (Corrected 27 October: date.)
• 2026-08-26MiniMax reported H1 2026 revenue of about $116.6 million, up 283% from H1 2025 (Bloomberg).
• 2026-07-18Page published.

Sources