Huawei is emerging as an important supplier of AI chips.
What’s new: Amid a U.S. ban on exports of advanced chips to China, demand for Huawei’s AI chips is so intense that the company is limiting production of the chip that powers one of its most popular smartphones so it can serve the AI market, Reuters reported.
Demand and supply: China’s biggest chip fabricator, Semiconductor Manufacturing International Corp. (SMIC), fabricates both the Ascend 910B, which is optimized to process neural networks, and the Kirin chip that drives Huawei’s popular Mate 60 phone. Production capacity is limited, so making more Ascend 910Bs means making fewer Kirins.
- The Huawei Ascend 910B is widely considered to be the best AI chip available in China. The chip has been reported to deliver performance roughly comparable to that of Nvidia’s A100 (immediate predecessor to the current H100, which is more than three times faster).
- The Nvidia H100, which is the industry standard for processing deep learning models, has become scarce in China since late 2022, when the U.S. restricted exports of advanced chips and use of chip-making equipment. The shortage of Nvidia chips is driving demand for the Ascend 910B.
- The U.S. action also forced Huawei to switch manufacturers from Taiwan Semiconductor Manufacturing Company to SMIC. But the limits on manufacturing equipment have made it difficult to fabricate the Ascend 910B. SMIC has been able to produce a relatively small number of units that are free from defects.
- Huawei’s decision to shift manufacturing from phone chips to AI chips is sacrificing one of its most popular products. Huawei’s Mate 60 phone outsold the Apple iPhone in China last year, helping to elevate Huawei in January to the top-selling phone maker in China for the first time in three years.
Behind the news: Nvidia accounted for 90 percent of the market for AI chips in China prior to the advent of U.S. export restrictions. China has responded to the limits by building its ability to manufacture advanced chips domestically — a tall order, since it requires technology that is very difficult to develop. In August, Baidu ordered 1,600 Ascend 910B chips for delivery by the end of the year, according to an earlier Reuters report. The order, which is tiny compared to typical data center purchases, nonetheless demonstrated that SMIC could manufacture the chips and that Baidu was experimenting with alternatives to Nvidia in anticipation of even tighter U.S. restrictions on AI chips that took effect in October. Currently, SMIC is gearing up to produce Huawei’s next-generation Ascend chips.
Why it matters: For years, Nvidia’s GPUs have been the only practical choice for processing deep learning models. The company’s lead over competitors both in hardware implementation and software support are likely to protect its dominant position for some time to come. However, competitors like AMD and Huawei are beginning to nip at Nvidia’s heels. That means more hardware options for developers, and the competition may drive lower prices and still higher performance.
We’re thinking: AI chips are at the heart of the current technological competition between the U.S. and China. While Huawei and SMIC still have a lot to prove in terms of scaling up production, their rate of progress is impressive and illustrates the limits of the current U.S. restrictions.