Huawei Prioritizes AI Chip Production Over Mate 60 Amid Tech Race

Huawei reportedly plans to increase the production of its Ascend 910B AI chip at the expense of Mate 60 phone production in at least one factory.

Huawei Shifts Factory Focus to AI Development, Leaving Bestselling Phone Behind

Ascend AI and Kirin, the chipset that powers the Mate 60, are produced by Huawei in the same facility. The corporation now intends to prioritize the AI chip because, according to sources familiar with the situation, production at the plant has been low. Reuters reported that domestic demand for Ascend chips, which support AI model training, has been rising.

Huawei can concentrate on increasing the quantity of usable and marketable chips produced at the plant by postponing the manufacture of chips for the Mate 60. The South China Morning Post claims that the Mate 60 assisted Huawei in surpassing Apple in phone sales in the nation in 2023, which makes the company's decision to halt production an intriguing wager on the value of AI.

Since the United States has limited chip exports, Chinese AI businesses have had difficulty obtaining highly sought-after AI chips like Nvidia's H100. Chinese AI developers are now forced to adopt homegrown substitutes, such as Huawei's Ascend 910B chip.

Despite being slightly behind the U.S. in progress, Chinese startups have been attempting to establish themselves in the generative AI hype cycle. Companies like Baidu have made large language models and chatbots available to the public, but they still don't match the size of OpenAI's ChatGPT or Google's Bard.

China was the first nation to publish AI regulations, requiring businesses developing AI products to submit their work for approval before making it available.

Market Analysis Drives Huawei to Slow Smartphone Production Temporarily

According to individuals familiar with the situation, Huawei has been compelled to prioritize artificial intelligence (AI) and slow down production of its high-end Mate 60 phones due to the growing demand for its AI chips and manufacturing limitations.

Three sources indicated that Huawei utilizes a single facility to produce Ascend AI chips and the Kirin chips that power its rival, Apple's iPhone. Two sources claimed that low yield rates, which are a proxy for production quality, had hampered productivity.

However, amid a Sino-US dispute, there's worldwide competition for AI functionality. Huawei is now placing its phones in second place due to a technological impasse, which coincides with the company leading Chinese smartphone sales for the first time in over three years.

Huawei opted not to respond. The circumstances provide a unique look into Huawei's difficulties as it attempts to recover from the crippling of its smartphone division and the cutting off of access to sophisticated chipmaking tools due to U.S. sanctions in 2019 on national security grounds. Huawei refutes any security danger.

Additionally, it shows how American limits on exporting AI processing chips to China have affected the market, which was 90% dominated by American firm Nvidia. This opens a new tab before the most recent restrictions in October forced Chinese consumers to turn to domestic options.

China's standing in terms of computer power has improved thanks to a government initiative. According to two sources and public tenders, this has encouraged local authorities to launch data center projects while increasing private and public demand for Huawei's Ascend series.

Most people agree that the Ascend 910B is the most competitive AI chip in China.

According to the people, Huawei has slowed the manufacture of Mate 60 smartphones to focus on producing Ascend chips rather than Kirin processors. They did not say when this arrangement started.

The individuals who asked not to be named because they were not authorized to communicate with the media stated that the company is hopeful this manufacturing arrangement is only temporary because it is also trying to increase its yield rate or the number of usable chips per wafer.

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