China's Huawei Technologies is preparing to launch a new AI chip designed to circumvent Washington's relentless chip sanctions. This move not only overcomes US restrictions but also threatens Nvidia's market share in the world's second-largest economy.
Sources familiar with the situation told the Wall Street Journal that China's big tech firms and telecommunications operators are currently testing Huawei's latest processor, Ascend 910C. Huawei's representatives told customers that the new chip is comparable to Nvidia's H100, which debuted last year but is unavailable in China.
TikTok's parent ByteDance, search-engine giant Baidu, and state-owned China Mobile are some companies that are discussing Ascend 910C chip orders with Huawei. The people noted that forecasted orders for the new AI chip exceed 70,000 or a market value of about $2 billion.
Ascend 910C will likely fill a void left by Nvidia. In 2022, US export controls prevented Nvidia from exporting its most advanced AI chips in China amid worsening chip wars between the superpowers. In response, Nvidia has sold a downgraded version of its AI chips in China (called H20) that complies with Washington's export rules.
The people explained that Nvidia's new China-oriented chip, B20, could have difficulty getting export approval from Washington.
Dylan Patel, an analyst at industry research firm SemiAnalysis, cautioned that any potential blockage of Nvidia's B20 chip for export to China could spell trouble for the company's market share in the country. He emphasized that Huawei's Ascend 910C is a more advanced chip than B20, underscoring the urgency of the situation for Nvidia.
SemiAnalysis estimates Huawei could produce 1.3 million to 1.4 million Ascend 910C chips next year. However, additional sanctions could complicate that forecast. It also forecasts that about a million H20 chips will be sold this year, which is about $12 billion.
In June, a Huawei executive at an industry conference said half of China's large language models are being trained on its chips. He said that 910 B's performance had surpassed Nvidia's A100 in training models.
What's concerning for Washington's political elites is that despite the relentless chip sanctions on China, reports like those from the WSJ indicate that these restrictions aren't slowing China's rise. Moreover, Nvidia's market share in China, which represents about 9% of its total revenue, is increasingly threatened by Huawei.
