Chinese Chip Giant Huawei Will Mass-produce AI chip in 2025 Amidst US Curbs

The US-China trade war has been on the edge lately. Due to this scuffle, Chinese chipmaker Huawei is facing problems over trade and security. The US has imposed very strict restrictions on Huawei and other Chinese tech Companies considering that their development poses serious security risks to the US.

In retaliation, Beijing is denying all these allegations and further encourages the country’s effort to become a closed technological cycle on high-end semiconductors.

However, these restraints have limited the generation of Huawei to develop more complex AI chips. This has hindered Huawei’s commercially relevant densities of the chips leaving only a small portion of AI chip manufacturing is functional.

Challenges in Yield and Production

The 910C is being produced by Semiconductor Manufacturing International Corp (SMIC) utilizing only its N+2 technology. However, the lack of advanced lithography equipment has caused a slowdown in productivity. Yields are between 20% which is still very low compared with the 70% that defines commercial projects.

Huawei currently produces the company’s Ascend 910B processor through SMIC, which has an abysmal yield rate of 50%. This has applied pressure on Huawei’s internal management to minimize its production goals and to hold back order fulfilment. Key clients, including ByteDance, procured chips over 100,000 worth this year but only received less than 30,000 up to July.

Impact of U.S. Trade Restrictions

Washington has limited Huawei’s ability to purchase EUV technology from ASML of the Netherlands for developing next-gen processors. According to a source as reported by Reuters, “Huawei knows there is no short-term solution, given the lack of EUVs, so it will give priority to strategic government and corporate orders.”

ASML has also stopped delivering its deep ultraviolet lithography (DUV) equipment to China because of restrictions from the United States. Adding to these woes, the major supplier, TSMC of chips was recently forbidden by the US Commerce Department to deliver advanced AI chips to Chinese customers, a move to subdue Huawei, a Chinese AI Chipmaker.

Outlook Amid Tightening Controls

Huawei plans to mass-produce its Ascend 910C in a bid to focus on advancement in AI technology. However, China will face tighter regulations and stricter policies during Donald Trump’s return to the White House. It is prominent as Donald Trump in his first term (2027-2021) had imposed higher tariffs on Chinese imports.