Replacing NVIDIA is a difficult task. Although Chinese competitors have been years behind the company's cutting-edge technology, many analysts and insiders have warned them that they are catching up due to U.S. export restrictions.

The U.S. chips have limited the restrictions on the sale of advanced semiconductor technologies, especially those used in artificial intelligence, which have been launched for several years, initially as the initial purpose of curbing China's military development and protecting the U.S.'s advantages in the AI ​​industry.

However, according to Nvidia Jensen Huang, CEO of US semiconductor export control, is a "failure" and causes more damage to American companies than China.

Independent technology and chip analyst Ray Wang said that while the goal of cutting the Chinese military's goal of obtaining advanced U.S. technology and maintaining U.S. leadership seems to have achieved some success on paper, vulnerabilities and the goal of existing semiconductor libraries in China have complicated these goals.

Wang added: "That's why we're seeing a narrowing gap between Chinese and American AI capabilities."

Leaders of NVIDIA and other American chip designers have long lobbyed for chip control because they fear losing profitable business deals. Huang said at the annual Computex Technology Trade Show in Taipei that NVIDIA's GPU market share in China has dropped from 95% to 50% in the past four years.

Indeed, chip experts say that curbs do more harm than good to the United States

"The impact of controls is dual. They have the impact of reducing the ability of U.S. companies to enter the Chinese market, thus accelerating efforts in the domestic industry, thus pursuing greater innovation," said Paul Triolo, partner and senior vice president of China at DGA Group.

He added: “You create competitors for leading companies at the same time, while also setting them apart from the large markets in China.”

Former U.S. President Joe Biden, who passed Washington's most comprehensive export controls during his term in the White House, has returned to Donald Trump's first term on the roadside of Huawei and China's largest chip maker Smic.

NVIDIA revealed on April 15 that limiting its H20 graphics processing unit sales to new controls in China resulted in a revenue charge of $5.5 billion.

These restrictions are expected to bring good news to the demand and development of local NVIDIA alternatives such as Huawei, which is working with its own AI chips. Beijing has mobilized billions of dollars in background as part of the CHIP self-sufficiency movement.

"The most important thing is that controls are incentivizing China to become self-sufficient in these supply chains in ways they have never thought they would have thought," Triolo said.

China's AI-related achievements, such as the news about DeepSeek's R1 model and Huawei's chip progress, have led observers to question the effectiveness of chip control.

Independent analyst Wang said China's semiconductor and AI space has reached the acceleration of startups, market opportunities and AI talent, which obviously leads to home innovation.

"I think the argument that export control accelerates innovation is very effective," Wang said.

Nivida's Haung also pointed to these trends in April, telling Washington lawmakers that the country has made huge progress over the past few years just as the United States is lagging behind

NVIDIA's H20 chips are designed specifically to comply with existing chip controls before export restrictions.

"We're talking not only about an export control, but also about a series of origin control measures, which originated from 2019," Wang said.

Meanwhile, in what DGA’s Paul Trilio calls “goal post movement,” it seems that the purpose of limitation has shifted to slowing down and including the intention of China’s AI and semiconductor development.

"The continued expansion of controls and the lack of expression of the clear game here really caused a lot of problems and a lot of collateral damage," Trilio said.

In a statement earlier this month, the U.S. think tank, which received funding from various technology companies, said in an article: "The Biden administration's policy on export control over AI chips has been largely failing since day one. However, year after year, it has doubled in an attempt to plug all kinds of vulnerabilities."

"While (the U.S. government) is certainly the right to prevent U.S. companies from selling advanced AI technology to the Chinese military, it's worse than the disease to separate U.S. companies from the entire commercial China market," ITIF's Stephen Ezell told CNBC in an email.

“U.S. export controls have brought NVIDIA sales to at least $15 billion, and these are the revenue companies need to earn to invest in innovation for future generations.”