Analysis: US chip curbs give Huawei a chance to fill the Nvidia void in China

Digital China Holdings

20/10/2023 12:09

By Josh Ye
       HONG KONG, Oct 20 (Reuters) - 
    U.S. measures to limit the export of advanced artificial
intelligence (AI) chips to China may create an opening for
Huawei Technologies  HWT.UL  to expand in its $7 billion home
market as the curbs force Nvidia to retreat, analysts say. 
    While Nvidia  NVDA.O  has historically been the leading
provider of AI chips in China with a market share exceeding 90%,
Chinese firms including Huawei have been developing their own
versions of Nvidia’s best-selling chips, including the A100 and
the H100 graphics processing units (GPU). 
    Huawei's Ascend AI chips are comparable to Nvidia's in terms
of raw computing power, analysts and some AI firms such as
China's iFlyTek  002230.SZ  say, but they still lag behind in
performance.
    Jiang Yifan, chief market analyst at brokerage Guotai Junan
Securities, said another key limiting factor for Chinese firms
was the reliance of most projects on Nvidia's chips and software
ecosystem, but that could change with the U.S. restrictions.
    "This U.S. move, in my opinion, is actually giving Huawei's
Ascend chips a huge gift," Jiang said in a post on his social
media Weibo account.
    This opportunity, however, comes with several challenges.
    Many cutting edge AI projects are built with CUDA, a popular
programming architecture Nvidia has pioneered, which has in turn
given rise to a massive global ecosystem that has become capable
of training highly sophisticated AI models such as OpenAI's
GPT-4.
    Huawei own version is called CANN, and analysts say it is
much more limited in terms of the AI models it is capable of
training, meaning that Huawei's chips are far from a
plug-and-play substitute for Nvidia.
    Woz Ahmed, a former chip design executive turned consultant,
said that for Huawei to win Chinese clients from Nvidia, it must
replicate the ecosystem Nvidia created, including supporting
clients to move their data and models to Huawei's own platform.
    Intellectual property rights are also a problem, as many
U.S. firms already hold key patents for GPUs, Ahmed said.
    "To get something that's in the ballpark, it is 5 or 10
years," he added.
    Huawei and Nvidia did not immediately respond to Reuters'
requests for comment. 
    
    COMPUTING POWER 
        If Huawei manages to grab Nvidia's market share, it
could claim another victory against the United States, which has
targeted the firm with export controls since 2019.
    Huawei rolled out the first Ascend GPUs that year and it is
one of a number of products - such as its Harmony operating
system - that the company says are entirely homegrown. 
    Over the past year, the telecoms giant has shown signs that
it is beating back against the U.S. curbs by unveiling an
advanced smartphone chip and making claims of breakthroughs in
chip design tools.
    It has also set its sights on becoming a key provider of
computing power for AI, with Chief Financial Officer Meng
Wanzhou saying last month that Huawei wanted to build a
computing base for China and give the world a "second option",
in a veiled reference to dominant provider the United States.  
    Huawei's partners in China so far include iFlyTek, a leading
Chinese AI software company which is using the Ascend 910 to
train its AI models. IFlyTek was also blacklisted by the United
States in 2019.  
    On Thursday, during iFlyTek's earnings call, Senior Vice
President Jiang Tao said the Ascend 910B's capabilities were
"comparable to Nvidia's A100" and announced that it was
developing a general-purpose AI infrastructure in China
alongside Huawei. 
    "Our partnership now aims to enable domestically developed
LLMs to be built with both homegrown hardware and software
technology," Jiang said. 
    Other partners include state-owned software firms Tsinghua
Tongfang and Digital China. At a conference in July, Huawei said
its AI chips now help power more than 30 large language models
(LLM) in China, which is going through a generative AI craze and
currently has more than 130 LLMs. 
    Charlie Chai, an analyst with 86Research, said Nvidia's
ecosystem dominance was not "an insurmountable obstacle if
domestic players are given sufficient time and a big customer
base". 
    China's self-sufficiency push, which has been championed by
President Xi Jinping, is likely to aid this. "In short, a small
disruption to near-term supplies, but a big boost to the
long-term self-sufficiency agenda," Chai added. 

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 (Reporting by Josh Ye; Editing by Brenda Goh and Miral Fahmy)
 ((Josh.Ye@thomsonreuters.com;))