Key Takeaways:
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- Huawei has doubled the production yield of its advanced AI chips, reaching 40%, making its Ascend 910C processors profitable for the first time.
- The breakthrough supports China’s push for semiconductor self-reliance, reducing dependence on U.S. chipmakers like Nvidia.
- Huawei plans to produce 100,000 910C chips in 2025, but challenges remain in competing with Nvidia’s superior software and market dominance.
- U.S. export controls and bans on advanced chipmaking equipment continue to shape the competitive landscape for China’s AI ambitions.
What Happened?
Huawei has significantly improved the production yield of its advanced AI chips, doubling it from 20% to 40% over the past year. This marks a major milestone for the company, as its Ascend 910C processors are now profitable for the first time. Huawei partnered with Semiconductor Manufacturing International Corp (SMIC), a sanctioned Chinese fabrication group, to achieve this progress using SMIC’s N+2 process, which bypasses the need for extreme ultraviolet (EUV) lithography equipment banned under U.S. export controls. Huawei plans to produce 100,000 910C chips and 300,000 910B chips in 2025, a significant increase from 2024 production levels.
Why It Matters?
Huawei’s advancements are a critical step in China’s broader goal of achieving semiconductor independence, a key priority amid U.S. sanctions designed to limit its access to advanced technology. The improved yield makes Huawei’s AI chips commercially viable, allowing it to challenge Nvidia’s dominance in China’s AI chip market. However, Huawei still faces hurdles, including competition with Nvidia’s superior Cuda software and challenges in scaling production to meet demand. For investors, this signals both opportunities in China’s growing AI ecosystem and risks tied to geopolitical tensions and supply chain constraints.
What’s Next?
Huawei aims to further improve its chip yield to 60%, aligning with industry standards and enhancing its competitiveness against Nvidia. The company is also working to address software and memory issues in its Ascend chips to better support large-scale AI model training. Investors should monitor Huawei’s ability to secure market share in China, particularly among state-run cloud providers, and its progress in reducing reliance on foreign technology. Additionally, U.S. export controls and potential regulatory changes will remain key factors shaping the future of China’s semiconductor industry and Huawei’s role within it.
