The world’s biggest smartphone maker is investing heavily in artificial intelligence (AI) chips. This is a significant change in strategy for Huawei, which has historically prioritized cloud computing and intellectual property over the past two decades.
The Shenzhen-based company has found a new way to bolster its earnings by prioritizing the lucrative tech set to dominate the global economy. The company aims to grab market share from industry leaders Nvidia Corp and Apple Inc by reducing consumers’ time to download applications and install updates and making its devices run faster.
AI chips have several uses in consumer electronics, such as accelerating the operation of cameras and audio systems. They also make smartphones capable of performing more complex tasks, such as recognizing faces and identifying objects.
But a key challenge is the high demand for such technology. In the past, Huawei’s efforts to ramp up chip production have been hampered by manufacturing constraints. The United States has increased restrictions on selling advanced chips and the machinery needed to produce them to China to prevent Beijing from gaining mastery of technologies that could aid its military.
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Huawei is working to overcome those limitations, but demand has outstripped supply. The company surprised market watchers with an unflagged launch of its premium Mate 60 phone series in August, which analysts say features a home-grown AI chip. The launch triggered a surge in demand for the device and drove sales of rival Apple’s latest iPhone to its lowest level in a quarter, according to data from Counterpoint Research.
Since then, the company has struggled to meet demand for premium phones and has been forced to slow production. Huawei uses one facility to produce both its Ascend AI chips and the Kirin chips that power its rival to Apple’s iPhone, and output has been hamstrung by a low yield rate — the number of usable chips per wafer — hindering production.
Despite the challenges, Huawei’s commitment to AI has remained undiminished. A Chinese government-backed computer lab plans to use Ascend AI chips to build one of the world’s largest AI computing platforms, with a target debut date of late 2024 or early 2025. The Cloud Brain III platform is expected to have up to 16,000 petaflops – or quadrillion floating point operations – of computing power.
Earlier this week, Reuters reported that Baidu Inc had ordered a large batch of Huawei’s AI chips. This was a rare public sign of the Chinese tech giant challenging Nvidia, which holds a dominant position in the market. The move was likely prompted by restrictions the United States has placed on Nvidia’s sale of advanced AI chips to China and a desire by Chinese companies to diversify their suppliers. However, it remains to be seen whether such a challenge will succeed.