Rising Competition in the AI Chip Arena: Nvidia vs. Huawei
The landscape of the AI chip market is witnessing an intense rivalry between two technological giants—Nvidia and Huawei. As the demand for advanced AI processing power surges, both companies are positioning themselves to capitalize on this booming sector. Nvidia has long been hailed as the leader, but Huawei is rapidly gaining ground with its innovative solutions. This article explores the current state of this competition, highlighting both companies' strategies and capabilities as they vie for supremacy in this critical market.
Nvidia currently holds the title as the leading chip supplier in the rapidly expanding AI market. The company's graphics processing units (GPUs) are ideally suited for artificial intelligence tasks due to their reliance on parallel processing, which enables simultaneous execution of multiple calculations and processes. In contrast, traditional CPUs utilize sequential processing, where tasks must be completed one at a time.
On the other hand, Huawei is making significant strides within China’s AI chip sector, despite facing U.S. restrictions aimed at national security. The company's Ascend AI processors, which are designed to manage AI workloads efficiently, are gaining traction domestically. These processors serve as alternatives to Nvidia's GPUs and are increasingly adopted across various industries in China.
Huawei is involved in the design of these chips, while the manufacturing is carried out by SMIC, China's largest foundry and the third largest globally, behind TSMC and Samsung Foundry. SMIC employs its N+2 node technology to manufacture Ascend chips, circumventing the need for advanced extreme ultraviolet lithography (EUV)—a critical component that is restricted from export to China by the U.S. and the Netherlands.
The restrictions faced by Huawei and SMIC stem from a change in U.S. export regulations enacted in 2020, which prevent foundries using American technology from selling cutting-edge chips to Huawei. Consequently, both Huawei and SMIC are unable to access EUV machines from ASML, the only manufacturer of such equipment. Nevertheless, SMIC is permitted to utilize ASML's older Deep Ultraviolet Lithography (DUV) technology to produce chips no more advanced than 7nm.
One significant advantage for Huawei is the notable improvement in yield for its chips, which has increased from a mere 20% to nearly 40%. Yield refers to the percentage of functional chips produced from a silicon wafer, and with hundreds of chips per wafer, this enhancement is crucial. As SMIC doubles its yield capacity, Huawei is preparing to launch the Ascend 910C, building on its existing Ascend 910B model. The company aims to produce 300,000 910B chips and 100,000 910C chips this year.
Currently, Nvidia dominates the AI chip market in China. However, with the imminent arrival of the Ascend 910C, competition with Nvidia's H100 AI GPU is on the horizon. With strong government support, relentless innovation, and a proactive approach, Huawei is poised to challenge Nvidia's position in China now and in the foreseeable future.
