China Speeds Up AI Semiconductor Independence Following Nvidia Export Ban by the U.S.

Key Takeaways

China accelerates AI semiconductor independence following U.S. export bans on Nvidia products.
Major companies, including Huawei and Alibaba, are developing their own AI chips to compete with Nvidia.
Chinese startups and existing firms are rapidly scaling their AI semiconductor capabilities to meet local demand.

Drivers of China’s AI Semiconductor Growth

China is rapidly advancing its AI semiconductor sector following U.S. restrictions that prevent Nvidia from exporting its technology to the country. Major tech firms such as Huawei, Alibaba, and Baidu are increasingly relying on homegrown AI semiconductors, aiming to build a robust tech ecosystem utilizing the vast Chinese market.

During the “Huawei Connect” event on September 18, Huawei revealed a roadmap for its follow-up model, the Ascend (昇騰, Sungteng) 910C. The new models, including the Ascend 950PR and 950DT, are expected to launch in 2024, leading up to the Ascend 970 set for release in 2028. Notably, the upcoming models will feature proprietary high-bandwidth memory (HBM) technologies, HiBL 1.0 and HiZQ 2.0. Reacting to challenges posed by U.S. sanctions preventing TSMC from producing chips, Huawei’s leadership is committing resources to integrate network technology to enhance performance. Vice Chairman Xu Zhun emphasized the company’s expertise and outlined aspirations to achieve significantly higher compute power compared to Nvidia’s NVL144 system slated for late 2026.

As the Chinese government pushes for localized semiconductor production, companies like Alibaba, Baidu, and Tencent are increasingly adopting Huawei’s Ascend 910C for their operations. Reports suggest Alibaba’s semiconductor division, T-Head, is nearing parity with Nvidia’s AI offerings, specifically the H20 model. During a recent visit to a China Unicom data center, Prime Minister Li Chang noted T-Head’s parallel processing unit (PPU) closely matches the performance of Nvidia’s technology.

Additionally, Baidu’s Kunlunxin received a substantial AI semiconductor order from China Mobile, adding to the momentum. Startups like Cambricon recorded a remarkable sales surge of 43 times year-on-year in the first half of this year, while Shanghai-based MetaX has launched its solution to compete directly with Nvidia’s H20. Overall, China is home to at least 16 companies focused on AI semiconductors, with many designing products compatible with Nvidia’s CUDA software ecosystem to facilitate smoother transitions for former Nvidia customers.

Although U.S. authorities permitted Nvidia to export H20 chips to China, the momentum for an independent Chinese semiconductor ecosystem now seems irreversible. Despite concerns regarding overall performance, many Chinese AI chips offer enhanced power efficiency, marking a significant milestone in a burgeoning sector that aims to reduce reliance on foreign technology.

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