China to persist with AI development in 2024 despite rigid US chip restrictions, UBS analysts say

China will press ahead this year with development of large language models (LLMs) – the technology used to train ChatGPT and similar applications – and generative artificial intelligence (AI) systems, despite restrictions imposed by the United States on the mainland’s access to advanced semiconductors, according to analysts from Swiss investment bank UBS.

China is expected to “work within those constraints and try to make progress” by tapping into domestic AI accelerator programmes and being more economical in using computing resources, said Nicolas Gaudois, head of Asia-Pacific technology research at UBS, during a webinar hosted by the bank on Tuesday.

Gaudois said US export controls have blocked China’s access to Nvidia chips used for AI projects, but indicated that the mainland’s ability to overcome such setbacks must not be underestimated.

The views expressed by UBS analysts reflect how China’s semiconductor industry weathered last year’s escalation of Washington’s tech sanctions, which restricted exports of advanced chip-making equipment and cutting-edge semiconductors for AI projects.

The mainland’s tech sector appeared to have overcome the chokehold of US export controls last year, when Huawei Technologies made a surprise return to the 5G smartphone market with new handsets powered by a “breakthrough” advanced made-in-China processor.

It showed the lengths taken by the US-blacklisted company to build up its operations, following years of struggles on account of trade sanctions.