US-sanctioned Huawei Technologies has started testing a new artificial intelligence (AI) chip with potential clients in China as companies look for alternatives to high-end Nvidia chips, edging closer to another breakthrough in China’s self-sufficiency push in semiconductors despite US restrictions.

Huawei has offered samples of its Ascend 910C processor to large Chinese server companies for hardware testing and configuration, according to two sources briefed by the matter. The chip, an upgraded version of the 910B, is being offered to large Chinese internet firms, which are also major Nvidia customers, according to one of the sources, a distributor of Huawei AI chips.

 

Huawei did not immediately respond to a request for comment on Friday.

Huawei has been racing to fill a void left by Nvidia after Washington banned the California-based chip designer from shipping its most sophisticated graphics processing units (GPUs) to China. The Ascend 910B chips, which Huawei has called on par with Nvidia’s popular A100 chips, have become a top alternative in multiple industries across the country. Its Ascend solutions were used to train roughly half of more than 70 of China’s top large language models as of last year, according to Huawei.

The Chinese tech giant has closely guarded its progress in chip advancements, but it is clear that Huawei is building a support system for the domestic AI industry. Huawei rotating chairman Eric Xu Zhijun, said a week ago that Huawei has built two computing businesses in the past five years to create another option that can meet enterprises’ AI infrastructure needs.

 

“The reality is that US restrictions on AI chips for China are unlikely to be lifted anytime soon,” Xu said. However, he noted that this has created an opportunity for the company to offer computing resources via its cloud services operation.

One of the sources who works with a server company said Huawei often bundles its solutions. “If we buy Huawei’s AI chips, then we have to buy other things from Huawei, such as its network solutions and storage solutions, which makes some hesitate,” the person said. Most of Huawei AI chips on the market are still 910B, according to a telecoms source working with Huawei on GPUs in Shenzhen.

Nvidia, for which China was its third-largest market in the financial year ended January 28, is one of the most prominent tech firms bearing the brunt of increasingly stringent US sanctions on China’s access to advanced semiconductors.

Nvidia was first barred from selling its A100 and H100 GPUs – two of the most in-demand chips for training and running AI models – to clients in China in August 2022. It later modified those chips to create the A800 and H800 to get around those restrictions, which Washington in turn barred from export to China last October.

This cat-and-mouse game – condemned by US Commerce Secretary Gina Raimondo – has continued. Nvidia has since developed the H20, L20 and L2 GPUs in an effort to maintain its market share in China.

Demand for the H20 was initially tepid, but sales have picked up steadily in recent months. Using a chip that is US rule-compliant with the US is more important for large Chinese cloud service providers because it gives them access to Nvidia’s technical support and maintenance services.

Nvidia is expected to deliver more than 1 million H20 GPUs in China this year, racking up US$12 billion in sales.