Report says Huawei can still produce about 750,000 advanced AI chips despite U.S. sanctions

The Center for Strategic and International Studies (CSIS) cited sources in a new report as saying that Chinese technology giant Huawei may have enough chips to produce one million Ascend910CAI chips. Citing industry sources, the report revealed that China's major chipmaker Semiconductor Manufacturing International Corporation (SMIC) has successfully overcome a key bottleneck in expanding its 7nm semiconductor manufacturing scale by acquiring deposition and other chip manufacturing tools from the United States.

While SMIC cannot compete with Taiwan's TSMC in manufacturing 7-nanometer chips or advanced chips, CSIS added that SMIC's partnership with Huawei could lead to breakthroughs in EUV as both parties have invested significant resources in overcoming this key bottleneck.

The CSIS report describes DeepSeek’s entry into the AI ​​race, noting that while the ability of China’s AI models to reduce costs is commendable, it is only a natural part of the evolution of AI. The U.S. government's policy "implies that Chinese customers will be restricted from using" Nvidia V100 GPUs.

However, CSIS noted in the report that government officials ignored that "Nvidia has mechanisms in place to make post-production modifications to existing chip products." According to its report:

Industry sources confirmed to CSIS that NVIDIA halted exports of A100 chips to China while reducing its interconnect speeds (but not processing power) below export control performance thresholds to create the A800 product line.

Nvidia's China-specific A800 GPU, designed to comply with U.S. export restrictions, is very similar to the A100 GPU. CSIS added that while the China-specific H800 does have some differences from the restricted H100 GPU, demand for the A800 and H800 surged, while China's demand for the H100 and A100 GPUs was not significant due to similar performance parameters.

While DeepSeek has relied on Nvidia's GPUs for its AI development, sanctions on the latest GPUs have also forced it to consider alternatives. A key moat for Nvidia's GPUs is the CUDA language, and the Chinese AI company has also evaluated Huawei's CUDA alternative, CANN, according to CSIS. However, it is not enthusiastic about CANN, and according to people familiar with the matter, DeepSeek has assessed that "it will be several years before the combination of Ascend chips and CANN-compatible software becomes a viable alternative."

The U.S. demands on Taiwan Semiconductor Manufacturing Co. aim to prevent Huawei from developing and producing the latest artificial intelligence chips. The two latest artificial intelligence chips from the Chinese company are the Ascend910B and Ascend910C chips.

According to government sources at CSIS, TSMC "manufactured more than 2 million Ascend910B logic chips before the U.S. sanctions were issued, and those chips have now been delivered to Huawei. Since one Ascend910C combines two 910 B are connected together, so the researchers concluded that Huawei could produce up to 1 million Ascend910C chips. Industry sources at CSIS say that about 75% of Ascend910C chips currently survive the advanced packaging process.