Huawei's Ambitious AI Chip Developments Trigger Potential US Sanctions on Chinese Firms

The Biden administration is contemplating the addition of several Chinese semiconductor firms associated with Huawei Technologies Co to the blacklist. 

This consideration arises as Huawei achieved a notable tech breakthrough last year, raising concerns in Washington about its enhanced capabilities despite existing sanctions. Prior reports indicated Huawei, Tencent Holding Ltd TCEHY developing AI chips competing with Nvidia Corp’s NVDA to tap China’s $7 billion AI market.

This move could escalate the U.S. efforts to contain China’s aspirations in AI and semiconductor technology, putting additional pressure on Huawei, which has progressed in creating a smartphone processor unexpectedly advanced for its current sanctions status, Bloomberg reports.

Also Read: Nvidia Faces Fierce Competition in China, Tencent and Huawei Lead the Charge

Among the entities possibly facing blacklisting are chipmakers like Qingdao Si’En, SwaySure, and Shenzhen Pensun Technology Co. (PST), alongside China’s leading memory chipmaker, ChangXin Memory Technologies Inc.

These companies were identified in a presentation by the Semiconductor Industry Association, indicating their connection to Huawei’s efforts to develop chipmaking facilities. 

The U.S. is also considering sanctions against companies like Shenzhen Pengjin High-Tech Co. and SiCarrier, who are suspected of assisting Huawei in obtaining restricted semiconductor manufacturing equipment.

Reportedly, Chinese tech juggernaut Alibaba Group Holding Limited BABA collaborated with Huawei to create native applications for Huawei’s HarmonyOSto compete with Alphabet Inc’s GOOG GOOGL Google Android and Apple Inc’s AAPL iOS in mainland China.

Recent reports also indicated Alibaba’s Damo Academy is preparing to launch the C930, the newest member of its XuanTie series of RISC-V processors, within 2024 to overcome the difficulties imposed by strict U.S. trade restrictions on the export of advanced chip technologies from the likes of Nvidia Corp NVDA to China.

Reports have previously suggested that China’s embrace of the RISC-V architecture, an adaptable and power-efficient alternative to Advanced Micro Devices, Inc AMD and Intel Corp’s INTC, threatened their X86 chip dominance. 

At the XuanTie Partner Conference, Alibaba demonstrated the capabilities of RISC-V processors across various applications, including 5G communications, robotics, and financial services.

Price Actions: BABA shares closed lower by 0.14% at $73.42 on Tuesday. NVDA shares closed higher by 1.07% at $894.00.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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