• Huawei’s AI Ascend 910D chip represents significant advancement, could reshape China’s AI hardware landscape.
• New chip could help Chinese companies reduce dependence on US technology.

Huawei’s AI chip breakthrough appears imminent as reports suggest the Chinese tech giant is preparing to test its most powerful processor yet – the Ascend 910D.

According to the Wall Street Journal, Huawei has approached Chinese tech companies to evaluate the technical feasibility of its new chip, which is reportedly designed to outperform Nvidia’s H100 processor. The development marks a pivotal moment in China’s push for technological self-sufficiency amid ongoing US trade restrictions.

The timing couldn’t be more relevant. As Washington continues to tighten export controls on advanced chips to China, Huawei has been steadily improving its capabilities to fill the market gap. The Financial Times earlier this year reported significant progress in Huawei’s chip production capacity, noting that the company has “significantly improved the amount of advanced artificial intelligence chips it can produce, in a breakthrough that supports China’s push to create its advanced semiconductors.”

The improvement in manufacturing efficiency is important. According to the FT, “The Chinese conglomerate has increased the ‘yield’ – the percentage of functional chips made on its production line – of its latest AI chips to close to 40% […] That represents a doubling from 20% about a year ago.” While still below the industry standard of 60% for similar chips, the advance makes Huawei’s production line profitable for the first time.

The implications for Nvidia are, potentially, profound. China represents approximately 20-25% of Nvidia’s annual sales according to Grace Shao’s December 2024 analysis, “Deep Dive: Is Huawei like China’s Nvidia plus Google?”

With Chinese companies turning increasingly to domestic alternatives, Nvidia’s market share could face significant pressure. Shao notes that “As the chip ban took effect, Chinese AI companies began buying and hoarding inventory. However, Huawei’s launch of the Ascend 910B and then 910C completely disrupted the ecosystem in China and emerged as the most viable alternative to Nvidia’s sought-after A100 chip.”

The 910D could accelerate this transition further. What makes the development particularly remarkable is Huawei’s trajectory since being placed on the US trade blacklist nearly six years ago. Rather than faltering, the company has demonstrated extraordinary resilience.

The surprise launch of the Mate 60 smartphone in 2023, powered by a domestically produced processor, signalled Huawei’s determination to overcome external constraints. The phone’s introduction during then-Commerce Secretary Gina Raimondo’s visit to Beijing was widelyinterpreted as a symbolic demonstration of technological independence. Therefore, the potential success of the Ascend 910D would represent more than just a corporate achievement; it would validate China’s broader strategy to cultivate a self-sufficient semiconductor industry.

Beijing has been encouraging local tech companies to reduce reliance on foreign technology. As the FT reports, there is “state support, with Beijing urging local tech companies to buy more of Huawei’s AI chips and shift away from $3.3tn US chipmaker Nvidia.”

However, challenges remain. Huawei’s existing chips have faced technical limitations, particularly for large-scale model training. The FT says that “AI companies and Huawei researchers have also said that the Ascend 910B did not work well for large-scale model training, because of problems with inter-chip connectivity and memory issues.” Huawei has been working to address these shortcomings in its latest models.

Software ecosystem development also presents a substantial hurdle. Nvidia’s CUDA software platform is renowned for its ease of use and data processing capabilities, creating a high barrier to entry for competing software. As an unnamed source close to Huawei’s business told the FT, Nvidia’s software is “known for being easier to use and capable of faster data processing than Huawei’s offerings.” Supply constraints present another obstacle.

Despite ambitious production targets – 100,000 910C processors and 300,000 910B chips this year, according to the FT – Huawei faces challenges in meeting demand. Priority is reportedly given to large state-run cloud providers like China Mobile, leaving other potential customers struggling to secure supplies. Nevertheless, Huawei’s progress should not be underestimated. As Shao observes, “Huawei has created a comprehensive ecosystem and long invested in the cloud, hardware, and various touchpoints with enterprises and consumers (far before AI became hot).”

The integrated approach gives the company unique advantages in synthesising knowledge in different technologies. The geopolitical dimension adds another layer of significance. Huawei founder Ren Zhengfei recently told Chinese President Xi Jinping that worries about a “lack of core and soul” had eased, adding “I firmly believe a greater China will rise faster,” according to the People’s Daily as reported by the FT.

The reference to semiconductors (the “core”) and operating systems (the “soul”) underscores the national importance attached to Huawei’s technological advances. For global technology markets, Huawei’s AI chip breakthrough signals an acceleration of technological decoupling between China and the West. While Nvidia will likely maintain its global leadership position, particularly in advanced markets, the emergence of viable domestic alternatives in China could fragment the AI hardware landscape along geopolitical lines.

The real test will come when the Ascend 910D moves from testing to commercial deployment. If Huawei can deliver on its promise of superior performance while addressing previous limitations, it could mark a watershed moment in China’s technological development – and a significant challenge to Nvidia’s dominance in one of its most important markets.