For some time now, the US government has been trying to slow down the advance of the AI industry in China. To do so, authorities have set trade restrictions specifically targeting key hardware for artificial intelligence. However, recent developments suggest that the trade restrictions have not had the desired effect. According to reports, Huawei, one of the US’s most sanctioned companies, possesses sufficient resources to manufacture approximately 750,000 advanced AI chips.
US trade restrictions are not being as effective as authorities wanted
Huawei has been receiving trade restrictions from the United States for several years. The problems for the company began in the telecommunications segment. The US government argued that the firm’s telecommunications equipment posed a danger to the country’s telecommunications infrastructure. The authorities also issued restrictions related to the development of global 5G technology.
Like almost every big tech company, Huawei jumped on the artificial intelligence bandwagon. However, new trade restrictions sought to impede the firm’s advance in this segment. The most recent US trade restrictions came in December 2024. That said, it seems the measures were even less severe than Chinese companies themselves had expected. In fact, the response from the Chinese industry was “nonchalant,” as reported last year.
Huawei has stock to produce around 750,000 advanced AI chips despite US restrictions
Now, the Center for Strategic and International Studies (CSIS) reports that Huawei has enough resources to produce 1 million Ascend 910C AI chips. Developing these chips involves putting two Ascend 910B through a process called “packaging.” During the packaging, a percentage of the chips become damaged and unusable. Currently, it is estimated that Huawei can produce around 750,000 usable 910C units. “Roughly 75 percent of the Ascend 910Cs currently survive the advanced packaging process,” said an industry source.
Huawei could achieve this milestone in collaboration with SMIC. The two Chinese giants have been working together for years since Huawei is unable to access Snapdragon hardware. SMIC has produced the latest Kirin chips for Huawei smartphones. The firm’s factories also produce the company’s own Ascend AI chips. SMIC’s manufacturing processes are not on the same level as those of TSMC or Samsung. However, the optimization work done on older equipment has allowed them to make great strides.
Currently, SMIC is “stuck” on the 7nm process. After all, the company cannot access modern equipment needed to make the jump to more advanced processes. Therefore, SMIC must focus on improving and optimizing its current technology to achieve the best possible results.
SMIC has reportedly managed to legally acquire equipment from the United States
According to the report, SMIC faced a challenge when it couldn’t resolve a crucial bottleneck that hindered its ability to enhance its current 7nm process. However, the company managed to fix the problem by legally acquiring US deposition and other chip manufacturing tools.
You might be wondering how SMIC managed to acquire US equipment in the face of trade restrictions. The report states that there are two main reasons that allowed this without violating the restrictions. First, the equipment acquired “was not restricted on a country-wide basis to all of China.” Additionally, “the equipment was restricted on an end-use and end-user basis, but SiEn and Pensun told U.S. firms that it would exclusively be used for producing chips less advanced than 14 nm,” claims the source.
Ultimately, the equipment acquired by SMIC will allow it to significantly expand its 7nm wafer capacity by improving the yield rate. The company was achieving yield rates of only 20%, which is quite low. However, things are now looking much better for SMIC. Huawei, one of its key partners, will be one of the main beneficiaries.
