Chinese tech firms shift to Huawei and local chips as US controls tighten

In short: Chinese technology companies are increasingly turning to Huawei and other domestic chipmakers because U.S. export controls are making advanced Western chips harder to get.

What's going on

U.S. rules have steadily restricted sales of some advanced chips and chipmaking tools to China. That includes high-end chips often used to run AI systems (think of them as the “engines” inside big computer servers). As a result, Chinese companies say supplies of top Nvidia and AMD chips are less predictable.

In response, Chinese cloud and internet firms are using more homegrown chips where they can. Huawei’s Ascend chips are being positioned as a local substitute for Nvidia chips in data centers, which are large buildings filled with computers that power apps and online services. Huawei is also promoting Kunpeng server chips for government and state-linked projects.

Huawei is not only designing chips, it is also putting money into the wider chip supply chain. Reports cited by the New York Times say Huawei’s investment arm, Hubble, has backed more than 60 Chinese semiconductor-related companies since 2019, often with small ownership stakes. The investments cover many steps needed to make chips, from materials and equipment to packaging (the protective “case” and connections that let a chip work inside a device).

What to watch

This shift is growing, but it is not complete. Analysts have found some Huawei systems still rely on foreign parts like memory chips, and Chinese-made AI chips often lag the best U.S. chips in speed and software support. Watch for whether export controls tighten further, and whether China’s reported plans for major new funding for chip factories lead to more capable domestic chips over the next few years.

Source: NYTimes