The telecommunications giant has distributed samples of the Ascend 910C, designed to compete with Nvidia's offerings, to various technology firms and has begun accepting orders, as reported by Reuters.
Huawei finds itself at the center of escalating U.S.-China tensions regarding trade and security. The U.S. government has implemented a series of restrictions on Huawei and other Chinese firms, citing concerns that their technological advancements could pose a national security threat. In response, Beijing is striving to achieve self-sufficiency in advanced semiconductor production for its economy, which is the second largest in the world, while rejecting these security claims.
These restrictions have significantly impacted Huawei's ability to achieve a sufficient yield—the percentage of chips produced that are fully functional—necessary for the commercial viability of its advanced AI chips.
The Ascend 910C is being manufactured by Semiconductor Manufacturing International Corp (SMIC), a leading Chinese contract chipmaker, utilizing its N+2 process. However, the lack of advanced lithography equipment has resulted in a yield of only about 20%, according to one source familiar with the production outcomes.
For advanced chips to be commercially viable, yields must exceed 70%. Even Huawei's current top processor, the SMIC-produced 910B, has a yield of approximately 50%, which has compelled the company to reduce production targets and postpone fulfilling orders for that chip, the sources indicated.
Neither Huawei nor SMIC responded to requests for comments on Thursday.
U.S. RESTRICTIONS IMPACT OPERATIONS
ByteDance, the Chinese parent company of TikTok, placed an order for over 100,000 Ascend 910B chips this year but had received fewer than 30,000 by July, a supply rate insufficient to meet the company's requirements, as reported by Reuters in September. Other Chinese tech firms that have placed orders with Huawei have expressed similar frustrations, according to sources.
U.S. restrictions have included prohibiting China from acquiring extreme ultraviolet lithography (EUV) technology from the Dutch company ASML since 2020, which is essential for producing the most advanced processors globally.
According to a source, "Huawei understands that there is no immediate solution due to the unavailability of EUVs, so it will focus on fulfilling strategic orders from the government and corporate sectors."
Additionally, ASML has ceased the shipment of its cutting-edge deep ultraviolet lithography (DUV) machines to China, following regulations established by the Biden administration last year. Some semiconductor fabrication plants have also faced limitations on purchasing older ASML DUV models.
SMIC is charging a premium of up to 50% for chips produced on its advanced nodes, which are not as sophisticated as those from Taiwan's TSMC, and are manufactured using upgraded ASML DUV technology. Analysts and sources indicate that Huawei has been complementing its SMIC-produced chips with those from TSMC.
Recently, TSMC informed the U.S. Commerce Department that one of its chips was detected in a Huawei 910B process. The U.S. has placed Huawei on a trade list that mandates suppliers to secure licenses for any goods or technology shipments to the company.
In response, Washington has intensified its measures, instructing TSMC to stop the delivery of advanced AI chips to Chinese clients, aiming to prevent the diversion of these chips to Huawei.
U.S. officials are preparing to implement further export controls on the semiconductor sector, which will impose additional restrictions on shipments to Chinese companies. Donald Trump, who served as president from 2017 to 2021 and is expected to return to the White House in January, has made stringent trade policies against China a central element of his economic strategy.