Huawei Takes Aim at Nvidia's Dominance in China's AI Chip Market

Huawei is making a significant push to expand its market share in China's artificial intelligence chip market, targeting the "inference" segment currently dominated by Nvidia, the Financial Times reports. While Nvidia dominates the "training" segment of AI development, Huawei is positioning its Ascend AI processors as the optimal hardware for inference tasks, betting that this segment will become increasingly important as AI applications become more widespread.

Huawei's strategy involves encouraging local companies to adopt its chips for inference, a less technically challenging but potentially lucrative path. This involves helping companies adapt AI models originally trained on Nvidia's GPUs to run on Ascend chips, despite the two systems using different software.

The move is supported by the Chinese government, which has encouraged local tech giants to shift towards Huawei's AI chips. "Training is important, but it only occurs a few times," said Georgios Zacharopoulos, a senior AI researcher at Huawei's Zurich lab, to the Financial Times. "Huawei is mostly focused on inference, which ultimately will serve more customers."

Huawei's Ascend chips are not yet ready to replace Nvidia's for model training due to technical limitations, such as challenges in inter-chip connectivity when training large models. However, the company's upcoming Ascend 910C chip is expected to address these issues and improve software accessibility for developers.

Despite facing stiff competition from other players like Baidu and Cambricon in China, and Amazon and Microsoft in the US, Huawei is making significant strides. "Nvidia's China-specific H20 GPUs make up the majority of AI chips sold in China. But the lead is narrowing quickly as Huawei increases manufacturing capacity," said Dylan Patel, chief analyst at SemiAnalysis, to the Financial Times.

However, industry insiders caution that Huawei's AI chip push is currently constrained by supply chain issues, with some prospective customers reporting difficulty securing the chips. Analysts attribute these challenges to US export controls that have limited Chinese chip manufacturers to outdated equipment.

Despite these challenges, Huawei's focus on inference reflects a strategic shift in China's AI development. "Chinese companies are playing a different game. They are paying much more attention to inference than the US because it is possible to make big efficiency gains even with less powerful chips, which also means they can achieve commercialisation faster," said Lin Qingyuan, Bernstein's China semiconductor analyst, to the Financial Times.