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Huawei is making a strategic pivot in China's artificial intelligence chip market, targeting Nvidia's stronghold by focusing on inference processing rather than model training. The Chinese tech giant is positioning its Ascend AI processors as the preferred choice for companies running inference tasks - the computational process where AI models generate responses to prompts.
"Training is important, but it only occurs a few times," explains Georgios Zacharopoulos, a senior AI researcher at Huawei's Zurich lab. "Huawei is mostly focused on inference, which ultimately will serve more customers." This strategic focus reflects Huawei's assessment that inference processing will drive future demand as AI applications become more widespread and the pace of model training potentially slows.
The competition comes amid significant market dynamics, with Nvidia currently maintaining a $3.4 trillion market valuation and a dominant position in China's AI chip sector. Chinese AI companies heavily rely on Nvidia's GPUs for training large language models, considering them essential for AI development. However, U.S. export controls have created opportunities for domestic alternatives.
Huawei faces technical challenges in this market transition. According to Bernstein's China semiconductor analyst Lin Qinguan, "While the Ascend chips perform well on a per-chip basis, there is a bottleneck with the inter-chip connectivity. While training a big model, you must break it into smaller tasks. If one chip fails, the software needs to figure out a way for the other chips to take over without delay."
A significant hurdle for Huawei lies in persuading Chinese companies to adopt its proprietary software platform instead of Nvidia's widely-used CUDA framework. To address this, Huawei is actively supporting firms in transitioning to alternative software tools that enable their Ascend chips to perform inference tasks effectively.
The Chinese government has thrown its support behind Huawei's initiative, encouraging domestic companies to prioritize Huawei's AI chipsets over Nvidia's offerings. Industry insiders now regard Huawei as "the most serious competitor" to Nvidia within China, particularly given their advancing chip design capabilities.
Huawei's latest development, the Ascend 910C processor, aims to address limitations found in previous generations. The success of this initiative could reshape the competitive landscape of China's AI chip market, though the outcome remains uncertain.
