Epoch AI study finds China more exposed to semiconductor supply shocks than US

If the global chip supply chain seized up tomorrow, both superpowers would feel it. According to new analysis from Epoch AI, China would feel it more.

Epoch AI modeled what happens to each economy when the flow of semiconductors gets disrupted. The conclusion is directional and clear: China comes out worse on both cost and economic damage.

China remains heavily dependent on imports for advanced semiconductor tools and materials. Those are the expensive, hard-to-replicate machines and inputs needed to make cutting-edge chips. US export controls make that dependence more painful. Washington has spent recent years restricting what China can buy, so a supply shock would land on a system that is already constrained.

Epoch AI’s broader work on chip supply chains has flagged three major bottlenecks in AI hardware: advanced logic wafers, CoWoS, and high-bandwidth memory, or HBM. Logic wafers are the silicon brains of a chip. CoWoS is an advanced packaging technique that stitches components together. HBM is the ultra-fast memory that keeps AI processors fed with data. Lose any one of them, and the finished product doesn’t ship.

The smuggling side of the story

An Epoch AI report published April 29, 2026 estimated that somewhere between 290k and 1.6M H100-equivalent chips were smuggled into China through 2025. The median estimate sits at 660k. By the group’s estimate, smuggled chips account for about one-third of China’s total AI compute.

The spread in the estimate is also worth noting. The high end is more than five times the low end, which shows how murky this market is.

Interdependence cuts both ways

China dominates manufacturing for certain electronic components. The US, meanwhile, controls advanced design technologies and crucial fabrication capabilities. The US depends on Chinese transformers for its data centers — the electrical kind — and the AI buildout can’t run without them.

Taiwan and Hong Kong both show high export dependence on AI-enabling goods, which ties their economic fortunes closely to how the US-China chip standoff plays out.

Epoch AI also tracks who consumes the components that go into AI chips. That work points to heavy reliance on a handful of firms, including Nvidia, AMD, Google, and Amazon, particularly for HBM and advanced packaging capacity.

What this means

The smuggling estimates complicate the export-control story. If about one-third of China’s AI compute arrives through unofficial channels, enforcement matters as much as the rules on paper.

HBM, advanced packaging, and leading-edge wafers are already tight. A shock in any of them would ripple through Nvidia, AMD, Google, Amazon, and everyone downstream who depends on their hardware. The US transformer dependence on China for data centers represents a quieter but parallel risk.