Huawei is looking to take market share in AI chips from Nvidia in China

Huawei is trying to capture a larger share of the Chinese market for artificial intelligence chips dominated by Nvidia, helping local companies adopt its rival’s silicon for so-called “inference” tasks.

Major AI companies in China rely on graphics processing units (GPUs) made by Nvidia to “train” major language models, with the US$3.4tn chipmaker’s products seen as vital to developing the technology.

Instead of challenging Nvidia in training, Huawei is positioning its latest Ascend AI processors as the hardware of choice for Chinese groups that perform “inference”, the calculation made by LLM to generate an answer to a prompt.

The Chinese tech giant is betting that inference will be a future source of greater demand if the pace of model training slows and AI applications like chatbots become more widespread.

“Training is important, but it only happens a few times,” said Georgios Zacharopoulos, a senior AI researcher working on inference acceleration at Huawei’s Zurich lab. “Huawei is mainly focused on inference, which will ultimately serve more customers.”

It is focused on the technically less challenging but potentially lucrative route of retrofitting AI models trained on Nvidia products to run on Ascend chips, according to company employees and Ascend customers. Since Nvidia GPU and Ascend operate different softwareHuawei helps companies use another software tool to make the two systems compatible.

Huawei’s push comes with top-down government support. Chinese officials have urged local tech giants to buy more AI chips from Huawei and move away from Nvidia.

A person familiar with Nvidia’s operations in China said Huawei was seen internally as the most serious competitor in the country, adding that its chip design capability was “advanced”.

Washington has sought to curb Beijing’s AI development with export controls aimed at hindering the development of sensitive technologies in China.

Unlike its American rivals such as OpenAI and Google, companies cannot access the most advanced GPUs in China. But even if Chinese groups are only able to acquire Nvidia’s H20 chips suitable to meet export controls, the less powerful GPUs remain in high demand as they are considered better than local alternatives.

Analysts and Huawei researchers said Ascend was not yet ready to replace Nvidia for model training because of technical issues, such as a breakdown in the ways the chips interact with each other in a wider “cluster” of AI chips when training ever larger models.

“While Ascend chips perform well on a per-chip basis, there is a bottleneck with inter-chip connectivity,” said Lin Qingyuan, China semiconductor analyst at Bernstein. “When training a large model, you must break it down into smaller tasks. If a chip fails, the software needs to find a way for the other chips to take over without delay.”

The other challenge for Huawei is convincing developers to switch from Nvidia’s Cuda software, known as the company’s “secret sauce” for being easy to use for developers and capable of greatly speeding up data processing .

But Huawei’s upcoming and updated version of its AI chip, the Ascend 910C, is also expected to address these concerns. “We hope that this new generation of hardware will come with improved software that will make it more accessible to developers,” said a Huawei employee, who declined to be named.

Huawei and Nvidia face tough competition. Chinese Internet group Baidu and chip designer Cambricon have made strides in AI chip development. Meanwhile, in the US, Amazon and Microsoft are also betting that they can take more market share in chips for inference as AI applications become more widespread.

Estimates from SemiAnalysis, a chip consultancy, suggest that Nvidia made $12 billion in sales in China last year, shipping 1 million of its H20 chips in the country, selling twice as many AI chips as Huawei with its Ascend 910B.

“Nvidia’s China-specific H20 GPUs make up the majority of AI chips sold in China. But the lead is narrowing fast as Huawei ramps up manufacturing capacity,” said Dylan Patel, chief analyst at SemiAnalysis.

Industry insiders warned that Huawei’s AI chip push was also limited by insufficient supply, with two potential customers telling the Financial Times that they were unable to secure the chips.

Huawei did not respond to a request for comment. Nvidia declined to comment.

Analysts said Huawei’s manufacturing is likely to face challenges because of US export controls that have left Chinese factories dependent on outdated chip-making equipment.

The focus on inference also points to an evolving dynamic in Chinese AI that differs from the United States. Washington’s export controls mean Chinese AI players are not in the same race as Silicon Valley rivals Meta, Elon Musk’s x.AI and OpenAI to build large mega-clusters of more advanced GPUs by Nvidia.

“Chinese companies play a different game. They pay much more attention to inference than the United States, because it is possible to gain great efficiencies even with less powerful chips, which also means that they can achieve faster commercialization,” said the analyst Bernstein Lin.

Chinese companies are betting that they can be competitive on AI by reducing the cost of inference, which in turn makes it cheaper to run AI applications, he said.

Last month, Hangzhou and Beijing-based startup DeepSeek released its V3 model, which attracted attention due to its low training and inference costs compared to comparable models in the States. united

The company proposed a new way for an AI model to selectively focus on specific parts of input data as a way to reduce the costs of running the model. It also uses the “Mixture of Experts” technique popular with other Chinese AIs start-upswhich also helps to speed up the inference that only part of the model is used to generate an answer.

DeepSeek reported that Huawei successfully adapted V3 to Ascend, providing detailed instructions for developers on how to use the chip. The FT has it first reported that Huawei had sent engineers to help customers migrate from Nvidia to Ascend.

Additional reporting by Zijing Wu in Hong Kong