US moves to limit exports of advanced artificial intelligence chips to China could present an opportunity for Huawei Technologies Co. to expand its $7 billion ($11 billion) domestic market as restrictions force Nvidia to pull out, analysts said.
Although Nvidia has historically been the leading supplier of AI chips in China with a market share of more than 90%, Chinese companies, including Huawei, are developing their own versions of Nvidia's best-selling chips, including the A100 GPUs and H100. .
Huawei's Ascend AI chips are comparable to Nvidia's chips in terms of processing power, say analysts and some AI companies such as China's iFlyTek, but they still lag behind in performance.
Another major limiting factor for Chinese companies is the dependence of most projects on Nvidia chips and the software ecosystem, but that could change with U.S. restrictions, said Jiang Yifan, chief market analyst at brokerage Guotai Junan Securities. .
"This American move, in my opinion, is a great gift for Huawei Ascend processors," Jiang said in a post on the Weibo social network.
However, this opportunity comes with a number of challenges.
Many advanced AI projects are built using CUDA, a popular programming architecture first developed by Nvidia, which in turn has given rise to a large global ecosystem capable of building very complex AI models such as OpenAI's GPT-4 for train.
Huawei's own version is called CANN, and analysts say it is very limited in terms of the AI models it can train, meaning Huawei's chips are far from being a plug-and-play replacement for Nvidia.
For Huawei to lure Chinese customers away from Nvidia, it needs to replicate the ecosystem that Nvidia has built, including supporting customers to move their data and models to Huawei's own platform, said Woz Ahmad, former head of chip development. who became a consultant.
Intellectual property rights are also an issue, as several U.S. companies already hold key patents for graphics processing units, Ahmed said.
"It takes five or ten years to get something practical," he added.
Huawei and Nvidia did not immediately respond to Reuters requests for comment.
Computing power
If Huawei can take market share from Nvidia, it could score another victory over the United States, which has subjected the company to export controls since 2019.
That same year, Huawei introduced its first Ascend GPUs, one of several products, such as the Harmony operating system, that the company says is completely homemade.
Over the past year, the telecommunications giant has shown signs of standing up to US restrictions, introducing an advanced chip for smartphones and making progress in chip design tools.
The company has also set its sights on becoming a major provider of computing power for artificial intelligence, with Chief Financial Officer Meng Wanzhou saying last month that Huawei wants to build China's and the world's computing base as a "second option" in a I wish to give a covered reference. To the dominant US supplier.
Huawei's partners in China currently include iFlyTek, a leading Chinese AI software company that uses the Ascend 910 to train its AI models. IFlyTek was also blacklisted in the US in 2019.
During an iFlyTek conference call last week, senior vice president Jiang Tao said the Ascend 910B's capabilities are comparable to those of the Nvidia A100 and announced that the company is developing a global AI infrastructure in China with Huawei.
"Our partnership now aims to enable the construction of local LLM programs using local hardware and software technology," Jiang said.
Other partners include state-owned software developers Tsinghua Tongfang and Digital China. Huawei said at a conference in July that its AI chips are now used in more than 30 large language models (LLMs) in China, which is experiencing a generative AI craze and currently has more than 130 LLMs.
Nvidia's dominance in the ecosystem is not "an insurmountable obstacle if local players get enough time and a large customer base," said Charlie Zhai, an analyst at 86Research.
This is likely to be facilitated by China's drive toward self-reliance, championed by President Xi Jinping.
"In short, this is a small supply disruption in the short term, but a big boost to the self-sufficiency program in the long term," Zhai added.
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