China’s stockpile of Nvidia H20 artificial intelligence (AI) processors is likely to run out in about a year now that sales to Chinese customers have been banned by the Trump administration, according to the assessment of several market analysts.
Chinese tech giant Huawei thus must ramp up production of its new Ascend 910C alternative as quickly as possible while other Chinese AI chip designers step up efforts to avoid a chip shortfall in the years ahead.
Alibaba, ByteDance, Tencent and other Chinese companies ordered between US$12 billion and $16 billion worth of H20 processors, or perhaps even more, in the first quarter of this year, according to various sources. At least one million of the chips were reportedly delivered before shipments were cut off.
The new US sanction “didn’t come as a surprise because it was widely anticipated across the industry,” an unidentified Chinese corporate executive told Japan’s Nikkei Asia newspaper.
“Every major Chinese tech company had been stockpiling H20 in advance. After all, it wasn’t banned at the time, and given its strong performance, why not?”
The H20 sanction marked the third time that the US has put a ceiling on the performance of AI processors that may be exported to China and then, after new dumbed-down versions turned out to be best-sellers, lowered the ceiling again.
Huawei’s Ascend series of AI processors had its origins in the company’s Da Vinci design architecture, which was introduced in 2018 to serve as a platform for AI computing and replace Nvidia in data center, cloud, edge device and other applications. The Ascend 910 processor was launched the following year.
The Ascend 910B was introduced in 2022 after the US had forced Taiwan’s TSMC to cut off chip foundry services to Huawei. Fabricated in China by SMIC using non-sanctioned 7nm DUV lithography, its performance is assessed as close to that of the Nvidia A100, which was launched two years earlier, but about 20% below the H100. Exports of those two Nvidia chips to China were blocked in 2022.
The 910B was reportedly adopted by China’s Alibaba, Baidu, Tencent, speech recognition company iFLYTEK, AI software company SenseTime, local universities and national laboratories, and Huawei itself.
Mass shipments of the Ascend 910C, the development of which was revealed last August, are expected to begin within the next several weeks. Already used by China’s AI revelation DeepSeek, it is currently the most advanced Chinese alternative to Nvidia.
The 910C consists of two 910B chips connected together in a single package, similar to Nvidia’s leading edge Blackwell processor’s structure. On a stand-alone basis, the 910C’s performance is close to the H100 and exceeds the H20.
But the 910C is more impressive when used in Huawei’s new CloudMatrix 394 rack-scale AI data center solution – a complete system consisting of 384 Ascend 910C processors, servers, networking, storage, power management and cooling.
In the estimation of analyst Dylan Patel and his colleagues at SemiAnalysis, the CloudMatrix 394 “competes directly” with Nvidia’s top-end GB200 Grace Blackwell Superchip.
“The engineering advantage,” they write, “is at the system level not just at the chip level, with innovation at the accelerator, networking, optics, and software layers… Huawei is a generation behind in chips, but its scale-up solution is arguably a generation ahead of Nvidia and AMD’s current products on the market.”
Huawei’s solution uses considerably more electricity than Nvidia’s, but “the deficiencies in power are a relevant but not a limiting factor in China.” While this is the best that China can do now under current US sanctions, that probably won’t always be the case.
SemiAnalysis notes that Huawei still depends on imported high-bandwidth memory (HBM) from South Korea’s Samsung and that its AI processors are fabricated using imported equipment. But those two vulnerabilities are also being addressed.
Korean stockbroker Hyundai Motor Securities writes that Chinese DRAM maker CXMT is investing heavily in HBM, “targeting deployment in Huawei’s Ascend AI chips within two to three years.”
Furthermore, China’s semiconductor equipment and materials industry has advanced to the point where SMIC and other foundries, as well as CXMT and other Chinese memory chip makers, can upgrade their process technology and increase capacity in spite of US sanctions.
China’s leading maker of semiconductor production equipment Naura, for example, is now rated by some in the global Top 10.
Ascend 910C yields are still low, according to industry sources, but improving at a rate that suggests SMIC’s production capacity could reach 400,000 chips per month later this year. And Huawei has already announced its successor, the Ascend 920, fabricated using SMIC’s 6nm process, will be 30% to 40% more efficient than the 910C.
The 910C production estimate and Ascend 920 specs speak to the failure of US sanctions to block China’s access to AI processors. As for Nvidia, if those sanctions are not dropped, it will likely see its once overwhelming share of the China market drop to zero.
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