May 6, 2025 12:26 am
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Huawei Plans Mass Production of Advanced AI Chips Amid U.S. Restrictions

BEIJING, Nov 21 – Chinese tech giant Huawei plans to begin mass-producing its most advanced artificial intelligence (AI) chip, the Ascend 910C, in the first quarter of 2025, despite challenges posed by U.S. trade restrictions. The new chip is designed to rival AI processors from U.S. market leader Nvidia.

Ascend 910C: A Push for Advanced AI Innovation

Huawei has started sending samples of the Ascend 910C to select technology firms and is taking orders for the chip, according to sources familiar with the matter. This move underscores Huawei’s determination to advance its chip technology, even as it grapples with a low production yield due to limitations in semiconductor manufacturing technology.

The 910C chip is being manufactured by Semiconductor Manufacturing International Corp (SMIC) using its N+2 process. However, the yield—chips produced that are fully functional—stands at only 20%. Industry standards require yields of at least 70% for chips to be commercially viable, creating significant hurdles for Huawei.

U.S. Restrictions Hamper Progress

U.S. sanctions have severely impacted Huawei’s ability to acquire cutting-edge semiconductor manufacturing equipment. Since 2020, Chinese companies have been barred from accessing extreme ultraviolet lithography (EUV) technology from Dutch firm ASML, critical for making advanced processors.

Even older deep ultraviolet lithography (DUV) machines have been restricted under recent U.S. export controls, further complicating production. These restrictions have not only slowed Huawei’s chip development but have also led to delays in fulfilling orders for its current 910B processors, which have a slightly higher yield of 50%.

Challenges in Meeting Demand

Huawei has struggled to meet demand for its chips. For instance, ByteDance, the parent company of TikTok, ordered over 100,000 Ascend 910B chips in 2023 but had received fewer than 30,000 as of mid-year, sources said. Other Chinese technology companies have reported similar delays in receiving their orders.

To cope with limited production, Huawei is prioritizing strategic government and corporate orders, a source revealed.

High Costs and Reliance on SMIC and TSMC

Huawei’s reliance on SMIC comes at a significant cost. SMIC charges a premium of up to 50% for chips made on its advanced nodes, which lag behind those of Taiwanese chipmaker TSMC. Analysts and sources indicate Huawei has supplemented SMIC-made chips with processors from TSMC.

However, the U.S. government has placed Huawei on a trade list requiring suppliers like TSMC to obtain special licenses for technology shipments. Washington recently tightened restrictions, instructing TSMC to halt shipments of advanced AI chips to Chinese firms, including Huawei.

Geopolitical and Economic Implications

The U.S. continues to implement export controls to curb China’s progress in advanced semiconductors, citing national security concerns. These restrictions are part of broader U.S.-China tensions over trade and technology. Former President Donald Trump, who will return to the White House in January, has emphasized tough-on-China trade policies as a central part of his agenda, signaling potential further measures.

Conclusion: A Long Road Ahead for Huawei

Despite its ambitious plans, Huawei faces significant obstacles. The lack of access to EUV technology and low production yields threaten its ability to mass-produce commercially viable AI chips. With increasing U.S. restrictions and escalating geopolitical tensions, Huawei’s journey to AI chip dominance remains fraught with uncertainty. The company’s efforts are seen as part of China’s broader push for technological self-sufficiency, a goal that remains elusive under current circumstances.

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