Big AI chip battle brewing between Nvidia and Huawei
Nvidia is presently considered to be the leading chip supplier in the sizzling-hot AI market. The chipmaker's GPUs are perfect for AI because they use parallel processing which means that multiple calculations and processes are running simultaneously. This compares to sequential processing in which tasks are started and completed before the next one is started. This is how CPUs operate.
Coming on strong in China's AI chip industry is Huawei. Despite the restrictions placed on the Chinese manufacturer by the U.S. for national security reasons, Huawei's Ascend AI processors, developed to handle AI workloads, have been picking up sales momentum domestically. These chips can be used for AI instead of Nvidia's GPUs and are widely deployed in China.
While Huawei designs these chips, they are built by SMIC which is China's largest foundry and the third largest in the world after TSMC and Samsung Foundry. SMIC uses its N+2 node which allows the foundry to produce the Ascend chips without using extreme ultraviolet lithography (EUV), a chipmaking staple that the U.S. and the Dutch will not allow to be shipped to China.
The restrictions that Huawei and SMIC are dealing with date back to an export rule change made by the U.S. in 2020. That rule change prevents a chip foundry that uses American technology to build chips from shipping cutting-edge silicon to Huawei. In a similar fashion, Huawei and SMIC are not allowed to obtain any extreme ultraviolet lithography machines from the lone manufacturer that sells these machines. That would be the Dutch firm ASML.
SMIC is still allowed to use ASML's older Deep Ultraviolet Lithography (DUV) which can transfer circuitry patterns to silicon wafers for the production of chips no more advanced than 7nm.
One major positive for Huawei is the huge improvement in yield for these chips which went from a low 20% to nearly 40%. The yield is the percentage of good chips produced on a silicon wafer. Depending on the size of the chips, each wafer can contain hundreds of chips. Now that SMIC has doubled the yield, Huawei is about to introduce the Ascend 910C which is its next AI chip. Huawei hopes to produce 300,000 Ascend 910B chips and 100,000 Ascend 910C chips this year.
Right now, Nvidia dominates the market in China for AI chips. Still, the Ascend 910C should find itself competing with the Nvidia H100 AI GPU. With backing from the Chinese government, Huawei's innovation, and the company's "can-do" attitude, Huawei could give Nvidia plenty to handle in China now and in the near future.
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