The Huawei sales space on the Cellular World Congress in Barcelona, 2025.
Arjun Kharpal | CNBC
Regardless of being crushed down by years of U.S. commerce restrictions, China’s telecom large Huawei has quietly emerged as one of many nation’s fiercest opponents throughout your entire AI panorama.
Not solely does the Shenzhen-based agency seem to characterize Beijing’s reply to American AI chip darling Nvidia, however it has additionally been an early adopter of monetizing synthetic intelligence fashions in industrial purposes.
“Huawei has been pressured to shift and develop its core enterprise focus over the previous decade… as a result of a wide range of exterior pressures on the corporate,” stated Paul Triolo, associate and senior vice chairman for China at advisory agency DGA-Albright Stonebridge Group.
This enlargement has seen the corporate get entangled in every thing from sensible vehicles and working programs to the applied sciences wanted for the AI growth, corresponding to superior semiconductors, knowledge facilities, chips and enormous language fashions.
“No different expertise firm has been capable of be competent in so many various sectors with excessive ranges of complexity and boundaries to entry,” Triolo stated.
This yr, Nvidia CEO Jensen Huang has grow to be more and more vocal in calling Huawei “probably the most formidable expertise firms on the earth.” He has additionally warned that Huawei will substitute Nvidia in China if Washington continues to limit U.S. chip companies’ exports to the Asian nation.
Nvidia surpassed $4 trillion in market capitalization final week to grow to be the world’s most respected firm. Its cutting-edge processors and a associated “CUDA” computing system stay the {industry} customary for coaching generative AI fashions and purposes.
However that moat could also be narrowing, as Huawei proves that it not solely does all of it, it does it nicely. Whereas difficult American AI stalwarts like Nvidia is a tall order, the corporate’s historical past exhibits why it may’t be counted out.
Phone switches to nationwide champion
Huawei, which now employs greater than 208,000 individuals throughout over 170 markets, got here from humble beginnings. Based by formidable entrepreneur Ren Zhengfei in 1987 out of an residence in Shenzhen, the agency began as a small phone swap distributor.
Because it grew right into a telecoms participant, it gained traction by focusing on much less developed markets corresponding to Africa, the Center East, Russia and South America, earlier than ultimately increasing to locations like Europe.
By 2019, Huawei could be well-positioned to capitalize on the international 5G rollout, changing into a pacesetter available in the market. Round this time, it had additionally blossomed into one of many world’s largest smartphone producers and was even designing smartphone chips by way of its chip design subsidiary, HiSilicon.
However Huawei’s success additionally attracted growing scrutiny from governments outdoors China, significantly the U.S., which has ceaselessly accused Huawei’s expertise of posing a nationwide safety risk. The Chinese language firm has refuted such dangers.
The export controls have satirically pushed Huawei into the arms of the Chinese language authorities in a method that CEO Ren Zhengfei at all times resisted.
Paul Triolo
associate and senior vice chairman for China at DGA-Albright Stonebridge Group
Huawei’s enterprise suffered a significant setback in 2019 when it was positioned on a U.S. commerce blacklist, stopping American firms from doing enterprise with it.
Because the affect of the sanctions kicked in, Huawei’s client enterprise – as soon as the corporate’s largest by income – halved to about $34 billion in 2021 from the yr earlier than.
The corporate nonetheless managed a breakthrough on AI chips, and pressed forward regardless of further U.S. restrictions in 2020 that reduce the corporate off from chipmaker Taiwan Semiconductor Manufacturing Co. A yr earlier, Huawei formally launched its Ascend 910 AI processing chip as a part of a technique to construct a “full-stack, all-scenario AI portfolio” and to grow to be a supplier of AI computing energy.
However the U.S. focusing on of Huawei additionally had the impact of turning the corporate right into a martyr-like determine in China, constructing upon consideration it obtained in 2018 when Meng Wanzhou, Huawei’s CFO and daughter of Ren, was arrested in Canada for alleged violations of Iran sanctions.
Because the U.S.-China tech struggle continued to develop and broad superior chip restrictions had been positioned on China, Huawei was an apparent option to grow to be a nationwide champion within the race, with extra impetus and state backing for its AI plans.
“The export controls have satirically pushed Huawei into the arms of the Chinese language authorities in a method that CEO Ren Zhengfei at all times resisted,” Triolo stated. On this method, the restrictions additionally grew to become “the steroids” for Huawei’s AI {hardware} and software program stack.
The comeback
After one other yr of declining gross sales within the client phase, the unit began to show round in 2023 with the discharge of a smartphone that analysts stated contained a complicated chip made in China.
The 5G chip got here as a shock to many within the U.S., who did not anticipate Huawei to succeed in that stage of development so shortly with out TSMC. As an alternative, Huawei was reportedly working with Chinese language chipmaker SMIC, an organization that has additionally been blacklisted by the U.S.
Whereas semiconductor analysts stated the size that Huawei and SMIC may produce these chips was severely restricted, Huawei nonetheless had proved it was again within the superior chip sport.
It was additionally round this time that studies started surfacing about Huawei’s new AI processor chip, the Ascend 910B, with the corporate seeking to seize upon gaps left by export controls on Nvidia’s most superior chips. Mass manufacturing of the next-generation 910C is reportedly already on the way in which.
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To fill the void left by Nvidia, Huawei “has been making massive strides in replicating the efficiency of high-end GPUs utilizing mixtures of decrease chips,” stated Jeffrey Towson, managing associate at TechMoat Consulting.
In April, Huawei unveiled its “AI CloudMatrix 384”, a system that hyperlinks 384 Ascend 910C chips in a cluster inside knowledge facilities. Analysts have stated CloudMatrix is ready to outperform Nvidia’s system, the GB200 NVL72, on some metrics.
Huawei is not simply catching up, “it is redefining how AI infrastructure works,” Forrester analysts stated in a report final month about CloudMatrix.
In the meantime, Huawei has additionally developed its personal “CANN” software program system that acts as a substitute for Nvidia’s CUDA.
“Successful the AI race is not nearly sooner chips. It additionally contains delivering the instruments builders have to construct and deploy large-scale fashions,” Forrester’s report stated, although authors famous that Huawei’s merchandise are nonetheless not built-in sufficient with different generally used instruments for builders to change over shortly from Nvidia.
The ‘Ascend Ecosystem Technique’
Whereas Huawei’s objective to surpass Nvidia is seen as a key growth in China and the U.S.’s race for AI, it is vital to notice that chips characterize only one constructing block of Huawei’s broader AI plans.
Huawei now has its arms all through the unreal intelligence worth chain, from chips to computing, to AI fashions and AI purposes. These completely different AI enterprise avenues additionally leverage different areas of the corporate’s huge expertise empire.
In reality, the corporate’s “ICT Infrastructure” enterprise — which incorporates 5.5G mobile community deployment and AI programs for industrial use — grew to become the corporate’s largest income driver at 362 billion yuan in 2023.
The corporate has been deploying its Ascend AI chips and AI CloudMatrix 384 at its rising portfolio of AI knowledge facilities, that are operated by its cloud computing unit, Huawei Cloud, established in 2017 to compete with the likes of Amazon Internet Companies and Oracle.
These knowledge facilities, in flip, have supplied the coaching capabilities and computing energy utilized by Huawei’s suite of AI fashions beneath its Pangu sequence.
Not like different general-purpose AI fashions like OpenAI’s GPT-4 or Google’s Gemini Extremely 1.0, Huawei’s Pangu mannequin is designed to help extra industry-specific purposes throughout the medical, finance, authorities, industrial and automotive sectors. Pangu has already been utilized in additional than 20 industries over the past yr, the corporate stated final month.
Rolling out such AI purposes typically entails having Huawei tech workers working for months on the undertaking website, even when it is in a distant coal mine, Jack Chen, vice chairman of the advertising division for Huawei’s oil, fuel and mining enterprise unit, which offers digital and clever options to remodel these industries, instructed CNBC.
That analysis enabled the corporate in Might to deploy extra 100 electric-powered vehicles that may autonomously transport filth or coal utilizing the telecom firm’s 5G community, AI and cloud computing providers.
And it isn’t restricted to China. The expertise can “be replicated on a big scale in Central Asia, Latin America, Africa, and the Asia-Pacific,” Chen stated.
Huawei has additionally open-sourced the Pangu fashions, in a transfer it stated would assist it develop abroad and additional its “Ascend ecosystem technique,” which refers to its AI merchandise constructed round its Ascend chips.
Chatting with CNBC’s “Squawk Field Asia” on Thursday, Patrick Moorhead of Moor Insights & Technique stated he anticipated Huawei to push Ascend in nations a part of China’s Belt and Street Initiative — an funding and growth undertaking geared toward rising markets.
Over a interval of 5 to 10 years, the corporate may start to construct severe market share in these nations, in the identical method it as soon as did with its telecommunications enterprise, he added.
