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How US chip curbs are ‘good news’ for Apple iPhone competitor in China

The US recently strengthened measures to limit the export of advanced AI chips to China. Reports indicated that this may force companies like Nvidia and AMD which are looking to expand by tapping the Chinese market to rethink their business strategy. But these restrictions may provide an opportunity for Huawei.

According to analysts, Huawei can expand in its $7 billion home market due to curbs on AI chips import. Notably, Huawei previously made Kirin smartphone chipsets and it was among the major 5G equipment providers. After being banned by the US citing security concerns, the company was majorly restricted to its home soil and recently, it bounced back in the smartphone market dislodging Apple from the top spot.

Huawei’s Ascend AI chips
Nvidia, a leading provider of AI chips in China, has a market share exceeding 90%. According to reports, Chinese companies, including Huawei, have been developing their own versions of AI chips similar to Nvidia’s A100 and the H100 graphics processing units (GPU).

“This U.S. move, in my opinion, is actually giving Huawei’s Ascend chips a huge gift,” as per Jiang Yifan, chief market analyst at brokerage Guotai Junan Securities.

Challenges for Huawei
According to Jiang’s post (via news agency Reuters) on his Weibo account, the opportunity for Huawei comes with several challenges.

Huawei’s own Ascend AI chips are comparable to Nvidia’s in terms of raw computing power but they still lag behind in performance. Furthermore, most of the work done by Chinese firms relied on Nvidia’s chips and software ecosystem but that could change with the US restrictions.

This means that Huawei must create an ecosystem just like Nvidia created and ensure clients move their data and models to Huawei’s platform.

Last month, the company’s chief financial officer Meng Wanzhou implied that Huawei wanted to become a key provider of computing power for AI and give the world a “second option”, in a veiled reference to the US.

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