Huawei CEO Ren Zhengfei said the company is one generation behind US chip technology but is improving performance using methods like cluster computing.

He noted Huawei invests 180 billion yuan (US$25 billion) annually in research, with focus on compound chips and reassured that US chip export controls are not a major concern.

The statement came as US and Chinese officials met in London to discuss trade and tech restrictions affecting Chinese companies like Huawei.

Ren acknowledged Huawei’s chip limitations but said the firm uses alternative approaches and downplayed its achievements, urging continued effort.

Despite US scrutiny, Huawei’s Ascend AI chips show strong performance, and the company continues to invest heavily in both theoretical and product-focused research.

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🔗 Source: Reuters

🧠 Food for thought

1️⃣ Export restrictions have accelerated China’s domestic semiconductor ecosystem

Huawei’s strategy demonstrates how export controls have transformed from mere barriers into catalysts for domestic innovation in China’s semiconductor industry.

The company has reportedly invested in over 60 Chinese chip-related firms since 2019 through its investment arm Hubble, strategically covering the entire semiconductor supply chain from design to manufacturing 1.

This aggressive investment approach follows a clear pattern seen after Huawei was added to the U.S. Entity List, which restricted its access to advanced chips and manufacturing equipment from foreign suppliers 2.

The substantial annual R&D budget of 180 billion yuan ($25 billion) represents Huawei’s commitment to technological self-sufficiency, with one-third specifically allocated to theoretical research that could lead to fundamental breakthroughs 3.

This trend of sanctions driving innovation extends beyond Huawei to China’s broader semiconductor industry, where government initiatives like the China Integrated Circuit Investment Fund have channeled significant resources into domestic chip development 4.

2️⃣ Technical workarounds reveal the strategic importance of computational architecture

Huawei’s frank admission about being “one generation behind” U.S. chips highlights how leading Chinese firms are developing alternative approaches to computational challenges rather than simply trying to replicate Western technology.

The company’s focus on cluster computing represents a strategic pivot to compensate for individual chip limitations, demonstrated in their AI CloudMatrix 384 system that links 384 Ascend 910C chips to create a powerful AI training platform 2.

By emphasizing “using mathematics to supplement physics” and “non-Moore’s law to supplement Moore’s law,” Huawei is acknowledging fundamental physical limitations while pursuing alternative computing paradigms 2.

3️⃣ Sanctions have shifted global semiconductor competition from products to ecosystems

Export controls have transformed the semiconductor competition from a product-based race to an ecosystem-building challenge, with significant implications for global technology leadership.

Huawei’s establishment of a comprehensive R&D center in Shanghai focused on advanced lithography equipment demonstrates a strategic shift to control the entire semiconductor manufacturing process rather than just chip design 5.

The company’s approach mirrors the successful ecosystem strategy of competitors like Nvidia, which dominates AI through the integration of hardware (GPUs) and software (CUDA), suggesting Huawei aims to build a complete AI platform with its Ascend chips and MindSpore framework 6.

This ecosystem competition has already produced tangible results, with Huawei building an advanced chip production line in Shenzhen capable of manufacturing 7nm processors – a significant achievement given export restrictions on advanced manufacturing equipment 1.

The long-term implications extend beyond individual companies to national technology strategies, as evidenced by Huawei founder Ren Zhengfei’s emphasis on education and talent development as crucial components of technological independence 3.

Recent Huawei developments

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