The news: US chip giants Nvidia and AMD are scrambling to build new factories and diversify their business strategies—two directions that will be expensive and time-consuming while resulting in short-term shortages and price increases for their customers.

The US tightened export rules on Nvidia’s H20 GPU and AMD’s MI308 accelerators last week, forcing both to seek special licenses for China and other markets, per Bloomberg.

Why it’s worth watching? To cushion the blow, each is boosting US capacity—Nvidia with a million square feet of Arizona fabs for Blackwell chips and new AI supercomputer plants in Texas; AMD via a TSMC‑backed EPYC line in Arizona. At the same time, Huawei and other Chinese vendors are racing to fill any void with home‑grown chips and cloud services.

Here’s what the tech industry is facing:

• Rising costs: US‑made chips and tariffs may increase prices for cloud and AI deployments, affecting all businesses reliant on these services.
• Supply risks: Even with new fabs, which can take up to three years to complete, US capacity will trail demand for years, tightening margins and raising costs.
• Competitive shift: China’s Huawei, battle‑tested under prior sanctions, could poach global customers while covering China’s growing demand for high-end AI processors.
• Strategic realignment: Hyperscalers and enterprises will reassess procurement and diversify vendors and regions. Microsoft is already scaling back its infrastructure plans.

Looking for new business opportunities: Nvidia is also broadening partnerships with the goal of defending revenue streams, managing geopolitical risk, and keeping pace with evolving AI demands.

• Nvidia announced during its GTC conference last week that it’s selling DGX personal AI computers, but those will be manufactured by ASUS, Dell, and HP and could be heavily tariffed.
• Its other projects include an automotive partnership with GM, open-source robotics in collaboration with Google DeepMind and Disney Research, and open-source software for AI workflows.

Our take: These companies, like the rest of the industry, can only plan so far. Export controls and capacity constraints will continue to reshape the AI landscape. 

Higher costs, slower rollouts, and new entrants will test cloud providers and AI vendors globally. Businesses reliant on cloud and AI workflows must monitor policy shifts and expand their supplier base to sustain innovation and competitiveness.

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