HONG KONG: Recent US measures to limit the export of advanced artificial intelligence (AI) chips to China may pave the way for Huawei Technologies to expand its presence in its $7 billion home market.
The curbs could potentially force Nvidia, the dominant player in the AI chip market in China, to retrench. While this presents a promising opening for Huawei, it comes with numerous challenges and considerations.
The Growing Competitiveness of Huawei’s Ascend AI Chips: Historically, Nvidia has held over 90% of the Chinese AI chip market. However, Chinese companies, including Huawei, have been steadily developing their own versions of Nvidia’s popular chips, such as the A100 and H100 graphics processing units (GPUs). Huawei’s Ascend AI chips are now comparable to Nvidia’s in terms of raw computing power, although they still lag behind in terms of performance.
Impact of U.S. Export Restrictions: The U.S. export restrictions are likely to reshape the competitive landscape. Many AI projects rely heavily on Nvidia’s chips and software ecosystem, but with these restrictions in place, Chinese companies may have an opportunity to shift their dependence away from Nvidia. This change could potentially give Huawei’s Ascend chips a significant boost.
Challenges for Huawei: While the opportunity is promising, it also comes with numerous challenges. Many cutting-edge AI projects are built using Nvidia’s CUDA programming architecture, which has created a vast global ecosystem for highly sophisticated AI models. Huawei’s alternative, known as CANN, is considerably more limited in terms of its capacity to train advanced AI models. To win over Chinese clients from Nvidia, Huawei must replicate the entire ecosystem that Nvidia has built, including supporting clients in migrating their data and models to Huawei’s platform.
Intellectual property rights are another obstacle, as many key patents for GPUs are held by U.S. firms. Overcoming these challenges will require a substantial investment of time and resources, potentially taking five to ten years.
Huawei’s Ambitions and Potential Victories: If Huawei manages to capture Nvidia’s market share, it will achieve another significant victory against the United States, which has imposed export controls on the company since 2019. Huawei has made considerable strides in countering these curbs, showcasing its commitment to developing homegrown technology, such as its Harmony operating system and Ascend GPUs.
Furthermore, Huawei is determined to become a major provider of computing power for AI, signaling its ambition to offer a “second option” for the world. Its partners in China, including iFlyTek and state-owned firms like Tsinghua Tongfang and Digital China, are aligning with this vision, using Huawei’s AI chips to develop large language models and general-purpose AI infrastructure.
The Path Forward: While Nvidia’s ecosystem dominance may seem formidable, it is not insurmountable, especially if domestic players are given sufficient time and access to a sizable customer base. China’s push for self-sufficiency in the technology sector, championed by President Xi Jinping, is expected to further bolster Huawei’s prospects. In the short term, there may be disruptions in the supply chain, but in the long run, these restrictions may enhance China’s self-sufficiency agenda.
