Nvidia’s AI chip faces new rival from Huawei in Chinese market – report

Huawei Technologies is nearing to unveil a new chip to use for AI, as the Chinese company inches ahead to overcome U.S. sanctions to compete with Nvidia (NASDAQ:NVDA), The Wall Street Journal reported.

In recent weeks, Chinese internet companies and telecommunications operators have been testing Huawei’s new chip known as Ascend 910C, the report added citing people with knowledge of the matter.

Huawei has told potential clients that the new chip is comparable to Nvidia’s H100, which was unveiled last year and is not directly available in China, as per the report.

However, Huawei has been facing manufacturing delays in its current chips, the report noted. The company could potentially see more U.S. curbs which could prevent it from getting machine parts and the latest memory chips used in AI hardware.

Chinese companies including TikTok owner ByteDance (BDNCE), Baidu (BIDU) and state-owned telecom carrier China Mobile are in early talks to get the 910C.

Preliminary discussions between Huawei and potential customers suggest that orders could go past 70,000 chips, with a total value of about $2B, according to the report.

Huawei intends to begin shipping as soon as October. However, the sources noted that final purchases may vary from preliminary plans and the delivery schedule could change.

At a semiconductor industry conference in June, a Huawei executive noted that around half of China’s large language models were trained with Huawei’s chips. He said the 910B’s performance had surpassed Nvidia’s A100 in training models, according to the report.

In June, it was reported that in recent months, U.S. Commerce Department’s officials pressured American chip equipment makers and their suppliers to stop selling to Huawei and to the Chinese company which makes Huawei chips. Due to this, the company was facing issues to increase production of its Ascend AI server chip.

Last year, Baidu reportedly ordered 1,600 of Huawei’s Ascend 910B AI chips — which were developed as an alternative to Nvidia’s A100 chip — for 200 servers.

Nvidia is reportedly working on a new chip with a special server design for China which would not violate U.S. export restrictions. Nvidia is teaming up with Inspur, one of its main distributor partners in China, to launch and distribute the chip, initially dubbed as B20.

Earlier this year, Nvidia cut the price of its most advanced chip it made for the Chinese market, H20, pricing it below the rival chip from Huawei.

In October 2023, the U.S. brought in updates to its export restrictions which would curb the sale of chips that Nvidia made for the Chinese market, such as the A800 and H800 chips, as part of Washington’s efforts aimed at hindering China’s access to advanced semiconductor technology. The U.S. has also restricted Nvidia from selling the A100 and more powerful successors, including the H100, in China. This prompted Chinese companies to buy less-powerful Nvidia chips.

Huawei was once in competition with Apple (AAPL) and Samsung (OTCPK:SSNLF) to be the world’s biggest handset maker until U.S. restrictions, starting in 2019, began to curb its access to chip manufacturing tools needed to produce its most advanced models. The U.S. pressure against suppliers for Huawei’s chip started after Huawei surprised many in August last year by quietly launching its new flagship smartphone, Mate 60 Pro. The chip inside the phone ignited concerns in the U.S. and raised questions about how it was possible, without the company being able to access critical technologies.

Earlier this month, it was reported that Baidu (BIDU), Huawei and Chinese startups are storing high bandwidth memory, or HBM, chips from Samsung, expecting new U.S. restrictions on exports of semiconductors to China.