Huawei Challenges NVIDIA in China with New AI Chip

Huawei Challenges NVIDIA in China with New AI Chip

  • 5 hours ago
  • techrepublic.com
  • Keywords: danger, success

Huawei is developing its Ascend 910D AI chip to compete with NVIDIA's H100 in China. New US tariffs and restrictions have limited NVIDIA's sales, prompting Huawei to accelerate production of domestic alternatives.

Nvidia NewsNVDAsentiment_dissatisfied
open_in_newOriginal article

Estimated market influence

Huawei

Positivesentiment_satisfied
Analyst rating: N/A

Huawei is preparing to test its Ascend 910D AI chip, aiming to challenge NVIDIA in China.

NVIDIA

NVIDIA

Negativesentiment_dissatisfied
Analyst rating: Strong buy

NVIDIA's H100 chip sales were banned in China, impacting their revenue which dropped by 9% since 2022.

Context

Analysis of Huawei's Challenge to NVIDIA in China with the Ascend 910D AI Chip

Overview

  • Huawei's New AI Chip: The Ascend 910D is designed to rival NVIDIA's H100, which has been banned from sale in China since October 2023.
  • Shipments and Testing: Huawei plans to ship samples of the Ascend 910D to tech companies in late May for technical feasibility testing before customer release.

Market Dynamics

  • US Tariffs and Trade Restrictions:
    • Ongoing tit-for-tat export restrictions on semiconductors between the US and China since 2024.
    • US President Donald Trump's announcement of tariffs on all countries with trade deficits added further disruption to the chip market.
    • These measures are expected to increase NVIDIA's operational costs, potentially pushing Chinese buyers toward domestic alternatives like Huawei's Ascend series.

Financial Impact

  • NVIDIA Revenue Drop:
    • China accounted for only 17% of NVIDIA's revenue in 2024, down from 26% in 2022, due to the H100 ban.
  • Huawei's Chip Deliveries:
    • Huawei aims to deliver over 800,000 Ascend 910B and 910C chips in 2023 to major customers like ByteDance (TikTok parent) and state-owned telecoms.

Competitive Landscape

  • NVIDIA's Challenges:
    • The H20 chip, designed to circumvent US export controls, faced restrictions requiring a license for sales to China.
    • NVIDIA estimated the licensing requirement could cost the company $5.5 billion.
  • Huawei's Strategic Move:
    • Huawei is advancing the Ascend 910D as an alternative to NVIDIA's H100, capitalizing on the vacuum left by US restrictions.

Long-Term Effects and Regulatory Implications

  • US AI Sovereignty Concerns:
    • The US aims to block China from accessing NVIDIA's advanced hardware to maintain control over AI development.
    • Concerns about China's progress in AI and semiconductor self-reliance are driving these regulatory actions.

Strategic Considerations

  • Domestic Chip Push:
    • The situation underscores China's shift toward domestic chip production, accelerated by US tariffs and restrictions.
    • Huawei's Ascend series is positioned to fill the gap left by NVIDIA's restricted sales in China.