Huawei Wants To Take Nvidia's Place In AI In China, Shifts Focus to Inference Over Training

Chinese smartphone giant Huawei Technologies is eyeing a larger share of the domestic market for artificial intelligence chips by helping local companies leverage its silicon for “inference” tasks as chatbots gain traction at the cost of model training.

Nvidia Corp NVDA made $12 billion in sales in China in 2024, selling twice as many AI chips as Huawei with its Ascend 910B, Financial Times cites SemiAnalysis report.

Top AI companies in China rely on Nvidia graphic processing units (GPUs) to “train” large language models.

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Huawei is positioning its latest Ascend AI processors as the choice of hardware for Chinese companies that run “inference.”

Huawei focuses on retrofitting AI models trained on Nvidia products to run on Ascend chips, Financial Times cites the company employees and customers.

Since Nvidia GPUs and Ascend operate on different software, Huawei is helping companies make the two systems compatible.

Huawei’s move also reflects China’s government backing. The government urged domestic giants to buy more Huawei AI chips instead of Nvidia as the Biden administration implemented multiple artificial intelligence technology embargoes restricting China’s access to advanced semiconductor technology, including AI.

Analysts, including Bernstein, flagged Ascend’s technical challenges and the difficulties convincing developers to switch from Nvidia’s Cuda software.

Additionally, Huawei and Nvidia face stiff competition from Chinese internet groups Baidu Inc BIDU, Cambricon, Amazon.Com Inc AMZN, and Microsoft Corp MSFT.

Analysts also pointed to the U.S. semiconductor embargo, rendering Chinese fabs dependent on obsolete chip manufacturing equipment.

Domestic smartphone brands like Huawei and Xiaomi XIACF XIACY also gained ground in China as Apple Inc AAPL iPhone’s lack of AI features led to market share loss. The Chinese brands won market share, backed by aggressive discounting and government support.

Truist’s William Stein highlighted Nvidia’s gains from firm AI infrastructure spending, bolstered by innovation and leadership in AI compute chips and software.

Price Action: NVDA stock is up 0.92% at $138.98 premarket at last check Tuesday.

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