WASHINGTON, D.C.: The U.S. government estimates that Huawei will only be able to manufacture up to 200,000 advanced AI chips next year—well below the company's needs. However, officials warn that despite this limitation, China is rapidly narrowing the technology gap with the United States.

Jeffrey Kessler, Under Secretary of Commerce for Industry and Security, told lawmakers on Thursday that most or all of the chips will be delivered to domestic customers in China and emphasized that the U.S. must not be complacent.

"China is investing huge amounts to increase its AI chip production, as well as the capabilities of the chips that it produces," Kessler said during a hearing of the House Foreign Affairs South and Central Asia subcommittee. "So, it's critical for us not to have a false sense of security."

The Biden administration has maintained strict export controls to curb China's access to cutting-edge U.S. chips and manufacturing tools. Since 2019, Huawei and other Chinese firms have been at the center of these restrictions. Huawei's Ascend 910C AI chips are positioned as a domestic alternative to Nvidia's powerful offerings.

"Our assessment is that Huawei Ascend chip production capacity for 2025 will be at or below 200,000 and we project that most or all of that will be delivered to companies within China," Kessler said.

Meanwhile, the debate around how close China is to U.S. AI capabilities remains active. White House AI Czar David Sacks said Tuesday that China is just 3–6 months behind the U.S. in AI. The White House later clarified that this refers to AI models, not hardware. Chinese AI chips, it said, lag one to two years behind.

Huawei CEO Ren Zhengfei acknowledged in state media this week that his company's chips were a generation behind those of U.S. rivals but noted that Huawei invests over $25 billion annually to close the gap.

Though Nvidia's chips are more powerful, U.S. export controls have eroded its market share in China, giving Huawei an opening to grow.

The tech standoff played into recent trade talks in London, where the U.S. and China agreed to a tentative truce after tensions escalated over Chinese curbs on mineral exports. In response, the Trump administration imposed further controls on semiconductor design tools, jet engines, and more.

During the hearing, Democratic Representative Greg Meeks voiced concern that export controls were being conflated with broader trade negotiations.

Kessler responded, "What I will say is export controls have been strong, and I'm confident that they will remain strong."

While no immediate restrictions are planned, Kessler added, "It's a constantly evolving landscape, and we need to make sure that our controls remain effective."