Huawei's AI Chip Ambition: Filling the NVIDIA Void or a Costly Gamble?

The U.S. trade war with China has birthed an unexpected beneficiary: Huawei. As American sanctions squeeze NVIDIA’s ability to supply its advanced AI chips to Chinese markets, Huawei’s newly launched Ascend 910C and upcoming Ascend 920 series are positioning themselves as critical alternatives. This isn’t just a technical race—it’s a geopolitical showdown with profound implications for global AI chip markets.

The NVIDIA Void: A Geopolitical Opportunity

The U.S. restrictions on NVIDIA’s H100 and H20 chips since 2022 have created a vacuum in China’s AI infrastructure. These chips, vital for training large language models and supercomputers, are now largely off-limits. Huawei’s response? A dual-pronged strategy with the Ascend 910C (released in early 2025) and the Ascend 920 (slated for mass production in late 2025).

The Ascend 910C, built using China’s own Semiconductor Manufacturing International Corporation (SMIC) 7nm process, aims to match NVIDIA’s H100 in inference tasks—a critical function for deploying AI models. While benchmarks suggest it runs at 60% of the H100’s peak performance, Huawei argues its chip is 30% cheaper and optimized for China’s specific AI workloads.

The Ascend 920, targeting late-2025 release, goes further. Designed to rival NVIDIA’s restricted H20, it boasts 900 TFLOPS of BF16 performance and 4,000 GB/s memory bandwidth—a 30-40% improvement over the 910C. Yet, its success hinges on SMIC’s ability to scale production, as its 6nm N+3 process lags behind Taiwan’s TSMC in yield rates and efficiency.

Market Strategy: Price, Partnerships, and Pain Points

Huawei’s pricing advantage is its sharpest weapon. NVIDIA’s H100 sells for $20,000+ per chip, while the Ascend 910C is priced at $12,000—a gap that could lure cost-sensitive Chinese firms. This pricing war is already biting NVIDIA’s bottom line: its Q1 2025 losses from unsellable H20 chips totaled $5.5 billion, with analysts like JPMorgan estimating annual losses could hit $16 billion if sanctions persist.

The stock has plummeted over 30% since sanctions were tightened, with a sharp 7% drop in March 2025 following Huawei’s Ascend 920 announcements.

Yet Huawei faces hurdles. SMIC’s yield rates remain problematic, with Wedbush analysts noting its 6nm process is “challenged” compared to TSMC. Meanwhile, Huawei’s reliance on imported HBM3 memory—a key component for high-performance computing—creates a bottleneck. Chinese manufacturers still cannot produce HBM, forcing reliance on recycled or foreign sources.

The Geopolitical Tightrope

The U.S. sanctions were intended to cripple China’s AI ambitions, but they’ve had the opposite effect. By pushing Huawei to accelerate domestic chip development, Washington may have inadvertently created a long-term competitor.

• Market Share Shifts: Huawei’s chips now dominate China’s AI chip market, with estimates suggesting they’ll control 60% of domestic sales by 2026.
• Technological Sovereignty: China’s push for self-reliance in semiconductors is now a national priority. The Ascend 920’s success could catalyze investments in advanced lithography tools and memory production, reducing reliance on U.S. and Taiwanese tech.
• Global Rivalry: Analysts like Paul Triolo (Albright Stonebridge) warn that Huawei’s chips could permanently shrink NVIDIA’s Chinese market share, forcing global price cuts to remain competitive.

Investment Implications: Winners and Losers

• NVIDIA (NVDA): The stock’s decline reflects the $230 billion market cap loss since 2022 sanctions began. Investors should brace for further headwinds unless the U.S. eases restrictions or Huawei’s chips underdeliver.
• AMD (AMD): Facing similar sanctions on its MI308 chips, AMD has already written off $800 million in unsellable inventory. Its stock dropped 3% in April 2025 amid Huawei’s announcements.
• SMIC (SMICY): Huawei’s success hinges on SMIC’s manufacturing prowess. A surge in orders could boost SMIC’s valuation, but yield improvements are critical.

Conclusion: A New Era of AI Chip Competition

Huawei’s AI chip push is a landmark moment in the U.S.-China tech war. While the Ascend series may not yet rival NVIDIA’s best chips, its cost leadership and domestic support position it to dominate China’s market. For investors:

1. NVIDIA’s Pain is Huawei’s Gain: Every dollar saved on an Ascend chip is a dollar lost for NVIDIA. The $5.5 billion write-off is just the beginning.
2. Manufacturing Risks Remain: SMIC’s yield issues and HBM shortages could delay mass adoption. Monitor Q3 2025 production reports closely.
3. Global Pricing Pressure: If Huawei’s chips hit their targets, NVIDIA may slash prices globally to retain market share—a blow to its profit margins.

The verdict? Huawei’s AI chips are more than a stopgap—they’re a strategic pivot that could redefine the global AI chip landscape. Investors ignoring this shift risk missing the next wave of tech disruption.

A 200% surge since 2022 underscores the urgency of its chip ambitions—a trajectory that could accelerate with the Ascend 920’s launch.