Huawei's Secret Chip Factories
Huawei's Secret Chip Factories
Huawei's Secret Chip Factories
Sep 25, 2023
Sep 25, 2023
Sep 25, 2023
Tensions between the U.S. and China have continued to heat up over the past year, especially after the mainstream interest and boom of adoption in AI technology that shook the world last year.
It began on October 7, 2022 when the Biden administration announced sweeping restrictions on the sale of semiconductor technology to China, which many considered “a declaration of economic war on China”.
The restrictions limited U.S. exports of semiconductor chips, which use graphic processing units (GPUs) to power AI applications. This included setting a cap on the maximum processing speed of chips that could be sold to China. The goal being to slow China’s development of new AI technologies, as fears have grown of a winner takes all scenarios - both from an economic and military perspective - in the race to develop the most powerful AI tech.
Enter Huawei Technologies, one of China’s leading telecommunications companies and the second-biggest smartphone maker in the world, after Samsung. Last year, the Chinese tech giant received an estimated $30 billion in funding from the Chinese government to move into chip production.
Bloomberg recently reported that Huawei is building a secret string of semiconductor factories across China to get around the U.S. sanctions and make China less reliant on chips from the U.S. and Taiwan - the two current leaders in advanced chip production. Huawei itself was put on a blacklist by the Biden administration in January which blocks U.S. companies from selling and exporting to Huawei.
U.S.-based Nvidia (NASDAQ: NVDA) is one of the global leading chip makers, having recently experienced a doubling of its stock price due to demand for its GPU chips to create and power new AI technology. For context, Nvidia is now the 6th largest public company in the U.S. joining the likes of Apple, Amazon, and Microsoft as one of the few companies with a $1 trillion market cap.
Nvidia responded to U.S. restrictions by creating new, less powerful chip products specifically for China that fall under the limit of processing speeds and data transfer rates imposed by the Biden administration. This led to Chinese tech giants placing orders for over $5 billion worth of these handicapped chips. The U.S. is now considering increasing restrictions that would stop all shipments of chips made by Nvidia and other U.S. makers to Chinese companies without first obtaining a license.
These less powerful chips will likely make it more difficult for Chinese tech companies to train powerful AI models than their U.S. counterparts, giving U.S. companies a head start in developing stronger models. The rate of improvement of AI tech has been growing incredibly fast, and the U.S. hopes that this head start will allow them to widen the gap over time to the point where China cannot catch up, even when they develop the capabilities to make comparable chips themselves.
Originally featured in The AI China Report #1
Tensions between the U.S. and China have continued to heat up over the past year, especially after the mainstream interest and boom of adoption in AI technology that shook the world last year.
It began on October 7, 2022 when the Biden administration announced sweeping restrictions on the sale of semiconductor technology to China, which many considered “a declaration of economic war on China”.
The restrictions limited U.S. exports of semiconductor chips, which use graphic processing units (GPUs) to power AI applications. This included setting a cap on the maximum processing speed of chips that could be sold to China. The goal being to slow China’s development of new AI technologies, as fears have grown of a winner takes all scenarios - both from an economic and military perspective - in the race to develop the most powerful AI tech.
Enter Huawei Technologies, one of China’s leading telecommunications companies and the second-biggest smartphone maker in the world, after Samsung. Last year, the Chinese tech giant received an estimated $30 billion in funding from the Chinese government to move into chip production.
Bloomberg recently reported that Huawei is building a secret string of semiconductor factories across China to get around the U.S. sanctions and make China less reliant on chips from the U.S. and Taiwan - the two current leaders in advanced chip production. Huawei itself was put on a blacklist by the Biden administration in January which blocks U.S. companies from selling and exporting to Huawei.
U.S.-based Nvidia (NASDAQ: NVDA) is one of the global leading chip makers, having recently experienced a doubling of its stock price due to demand for its GPU chips to create and power new AI technology. For context, Nvidia is now the 6th largest public company in the U.S. joining the likes of Apple, Amazon, and Microsoft as one of the few companies with a $1 trillion market cap.
Nvidia responded to U.S. restrictions by creating new, less powerful chip products specifically for China that fall under the limit of processing speeds and data transfer rates imposed by the Biden administration. This led to Chinese tech giants placing orders for over $5 billion worth of these handicapped chips. The U.S. is now considering increasing restrictions that would stop all shipments of chips made by Nvidia and other U.S. makers to Chinese companies without first obtaining a license.
These less powerful chips will likely make it more difficult for Chinese tech companies to train powerful AI models than their U.S. counterparts, giving U.S. companies a head start in developing stronger models. The rate of improvement of AI tech has been growing incredibly fast, and the U.S. hopes that this head start will allow them to widen the gap over time to the point where China cannot catch up, even when they develop the capabilities to make comparable chips themselves.
Originally featured in The AI China Report #1
Tensions between the U.S. and China have continued to heat up over the past year, especially after the mainstream interest and boom of adoption in AI technology that shook the world last year.
It began on October 7, 2022 when the Biden administration announced sweeping restrictions on the sale of semiconductor technology to China, which many considered “a declaration of economic war on China”.
The restrictions limited U.S. exports of semiconductor chips, which use graphic processing units (GPUs) to power AI applications. This included setting a cap on the maximum processing speed of chips that could be sold to China. The goal being to slow China’s development of new AI technologies, as fears have grown of a winner takes all scenarios - both from an economic and military perspective - in the race to develop the most powerful AI tech.
Enter Huawei Technologies, one of China’s leading telecommunications companies and the second-biggest smartphone maker in the world, after Samsung. Last year, the Chinese tech giant received an estimated $30 billion in funding from the Chinese government to move into chip production.
Bloomberg recently reported that Huawei is building a secret string of semiconductor factories across China to get around the U.S. sanctions and make China less reliant on chips from the U.S. and Taiwan - the two current leaders in advanced chip production. Huawei itself was put on a blacklist by the Biden administration in January which blocks U.S. companies from selling and exporting to Huawei.
U.S.-based Nvidia (NASDAQ: NVDA) is one of the global leading chip makers, having recently experienced a doubling of its stock price due to demand for its GPU chips to create and power new AI technology. For context, Nvidia is now the 6th largest public company in the U.S. joining the likes of Apple, Amazon, and Microsoft as one of the few companies with a $1 trillion market cap.
Nvidia responded to U.S. restrictions by creating new, less powerful chip products specifically for China that fall under the limit of processing speeds and data transfer rates imposed by the Biden administration. This led to Chinese tech giants placing orders for over $5 billion worth of these handicapped chips. The U.S. is now considering increasing restrictions that would stop all shipments of chips made by Nvidia and other U.S. makers to Chinese companies without first obtaining a license.
These less powerful chips will likely make it more difficult for Chinese tech companies to train powerful AI models than their U.S. counterparts, giving U.S. companies a head start in developing stronger models. The rate of improvement of AI tech has been growing incredibly fast, and the U.S. hopes that this head start will allow them to widen the gap over time to the point where China cannot catch up, even when they develop the capabilities to make comparable chips themselves.