Huawei shifts from survivor to Nvidia challenger

Alibaba Holding

24/09/2026 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.  Refiles to fix typos in first and fifth paragaphs.
By Robyn Mak
HONG KONG, Sept 24 (Reuters Breakingviews) - What does not destroy Huawei, makes it stronger. Seven years after crippling US restrictions on the privately held Chinese technology champion, its annual reported sales have recovered to 881 billion yuan in 2025, or roughly $131 billion, above pre-sanctions levels, helped by a huge spend on research and development. Its new AI chips, the Ascend 960DT and Ascend 960PR, unveiled in September and due to launch next year are the latest sign that it is ready to take on the $5.5 trillion Nvidia NVDA.O.
In 2018, the Shenzhen-based company founded by former People's Liberation Army officer Ren Zhengfei was leading the global rollout of 5G mobile technology while its thriving smartphone division was second only to South Korea's Samsung Electronics 005930.KS by market share. That all changed after 2019 when Washington put it on a US export blacklist. Without access to critical components and software, including Google's GOOGL.O Android mobile operating system, it sold its low-end handset division, retreated from some Western markets and doubled down on innovating.
Today, Huawei's smartphones and electronics run on its own processors and software, and it leans on domestic suppliers for as much as 60% of components by value. New ventures in energy and cars have become the group's fastest-growing divisions. Huawei and peers including Alibaba's 9988.HK T-Head accounted for 41% of China's AI chip market in 2025, up from virtually zero just a few years ago. Huawei also has the key endorsement from pioneering AI lab DeepSeek, which is working closely with the company to deploy its hardware.
All this has also transformed Huawei's finances. In the six months to June, research and development expenses ate up more than a quarter of sales, equal to 121 billion yuan, roughly $18 billion, well above the 9% at Nvidia in its last fiscal year. As of end of last year, Huawei's long-term borrowings more than tripled to 219 billion yuan over the past 7 years, though Nvidia's have ballooned at a quicker pace.
Huawei and China may soon think the struggle was worthwhile. The company says its so-called "Tau Scaling Law", unveiled in June, enables it to make high-performing chips without Western-made lithography equipment. Combined with special networking technology, the company is betting it can link clusters, or "supernodes", of about 100,000 processors to work together to train frontier AI models, which would erode the edge of Nvidia's individual chips.
The next big challenge will be sourcing enough components and machinery to manufacture these at scale to meet booming domestic demand. But for all the existential angst Huawei has endured, that seems like a nice problem to have.
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CONTEXT NEWS
Huawei on September 17 announced it will launch two new artificial intelligence chips in 2027. David Wang, one of the Chinese tech firm's rotating chairs, said in a speech in Shanghai that the company plans to launch the 960DT in the first quarter of 2027 and the Ascend 960PR in the third quarter.
($1 = 6.7168 Chinese yuan renminbi)

(Editing by Una Galani; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on MAK/  robyn.mak@thomsonreuters.com))