Huawei Playing Chip Strategy Cards Amid Trade Tussles
Huawei's Founder Minimizes the Power of In-House Semiconductors - Huawei's founder discusses the robustness of their self-designed semiconductors.
In the midst of trade negotiations between China and the U.S., Huawei founder, Ren Zhengfei, has dismissed suggestions of his company's chip technology being on par with that of American counterparts. In an interview with China's state-run "People's Daily," Ren admitted that Huawei's individual chips are "still a step behind" US competition.
However, Ren downplayed the drama, pointing out that numerous Chinese companies are exceling in chip technology development, with Huawei being one of them. The US, according to Ren, is merely hyping up the strength of the Chinese company.
Ongoing trade sanctions have positioned Huawei to capitalize on the campaign against them. With US chipmaker Nvidia sounding the alarm over restrictions on shipments to China, Huawei stands to make gains in a market starved for advanced AI chips due to US bans.
Interestingly, Huawei's approach to bridge the tech deficit is through a strategy called "clustering," where multiple chips are synced together to pool computing power, thereby compensating for the shortcomings of individual chips.
As talks ensued in London between the US and Chinese delegations, concerns regarding China's export controls on rare earths were raised. Washington is urging relaxation of these controls, potentially leading to alleviation in trade constraints like computer chips or aircraft components where China heavily relies on foreign technology.
Beyond Individual Chip Dominance
In the face of technical limitations, Huawei is focusing on system-level innovation rather than mimicking top US chipmakers. Notable components of their clustering strategy include:
- Cluster Computing: Huawei clusters large numbers of Ascend AI chips, achieving aggregate compute power surpassing leading US systems in certain benchmarks, despite the individual chips lacking raw performance.
- Energy, Infrastructure, and Scale: Leveraging China's abundant energy resources and extensive data center infrastructure, Huawei deploys these chip clusters on a massive scale, offsetting limitations through sheer scale.
- Mathematical, Theoretical, and Architectural Innovations: Huawei invests heavily in novel architectures and fundamental research, emphasizing advanced mathematics, non-Moore’s law innovations, and theoretical breakthroughs.
Strategic Implications
- Evading Sanctions: The clustering approach enables Huawei to circumnavigate constraints imposed by US export controls on advanced semiconductor nodes and equipment.
- Long-Term Investment: A third of Huawei's $25 billion annual R&D budget is dedicated to theoretical research, signaling a long-term strategy to self-develop fundamental capabilities.
- Resilience and Independence: The clustering approach aligns with China's move for self-reliance in strategic technologies, reinforcing narratives of resilience and independence from foreign supply chains.
While Huawei's clustering strategy enables them to remain competitive in AI and high-performance computing, larger-scale clusters consume more energy, incur higher operational costs, and demand significant space. Nevertheless, this strategy helps Huawei deliver practical solutions in AI and maintain its presence in global AI markets despite US restrictions.
Overall, Huawei's clustering strategy leverages system-wide optimization and scale to compete in AI and computing markets despite limitations imposed by the US-China trade conflict.
- Despite Ren Zhengfei acknowledging that Huawei's individual chips are still a step behind US competition, the company is focusing on system-level innovation using a strategy called "clustering," involving cluster computing, leveraging China's energy resources and data center infrastructure, and investing heavily in mathematical and theoretical innovations, to ensure their competitiveness in AI and high-performance computing markets.
- As the US-China trade conflict continues, Huawei's clustering strategy, which enables them to circumnavigate US export controls on advanced semiconductor nodes and equipment, signifies a long-term strategy to self-develop fundamental capabilities and maintain their resilience and independence from foreign supply chains.
