China’s Huawei reportedly develops an advanced AI chip to rival Nvidia
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Chippin’ in… Chinese tech giant Huawei has created an advanced AI chip, set to debut in October, The Wall Street Journal reported. Big companies including TikTok parent ByteDance, Chinese search-engine powerhouse Baidu, and telecom China Mobile are already in talks to buy the chip (dubbed “Ascend 910C”). Orders are expected to exceed 70K chips valued at a total of $2B. Chinese companies have struggled to get their hands on the most advanced chips as the US has ramped up sanctions.
Nvidia was effectively barred from selling its most advanced chips to Chinese customers in 2022. While it’s working on a new version of the China-specific chip it created as a workaround, it may struggle to win US approval.
The US says its restrictions on China’s chip industry (mainly: barring Chinese companies from importing advanced chips and the parts and equipment needed to make them) are meant to prevent the country from using the tech for military purposes.
China, which says the US wants to suppress its economic growth, raised $48B this year to back its semiconductor industry.
When the chips are down… Biden is said to be weighing new chip restrictions on China. The US put Huawei on its “entity list” in 2019, restricting its access to the components, machinery, and factories used to produce advanced chips. In May, POTUS barred Huawei from buying chips from Intel and Qualcomm. But with billions in gov’t backing, Chinese tech titans could overcome restrictions by releasing their own advanced chips in their market.
Restrictions can have recoil… If Huawei can start selling an advanced chip, it could leave US companies like Nvidia to bear the brunt of chip sanctions because they’re restricted from selling to the second-largest economy. FYI: China is the largest chip buyer, snapping up about half the world’s semiconductors. Nvidia — which is on pace to sell $12B worth of its made-for-China AI chip this year — could lose market share there.