US restrictions slow down Huawei's AI chip ambitions

Huawei Technologies Co.'s ambitions to create more powerful chips for AI and smartphones have hit major snags because of US sanctions, stalling a major Chinese effort to match American technology.

Huawei is designing its next two Ascend processors, its answer to Nvidia Corp.'s dominant accelerators, around the same 7-nanometer architecture that's been mainstream for years, people familiar with the matter said. That's because US-led restrictions prevent Huawei's chipmaking partners from procuring state-of-the-art extreme ultraviolet lithography systems from ASML Holding NV.

That means its marquee chips will be stuck at aging technology till at least 2026, the people said, asking to remain unidentified discussing a sensitive project. Huawei's smartphone processors, for the Mate lineup, face similar constraints, one of the people said.


Huawei's stall has implications not just for its business, but also for China's broader AI ambitions. Its struggles suggest the country will lag further behind the US in 2025, when Taiwan Semiconductor Manufacturing Co. - chipmaker to Apple Inc. and Nvidia - begins to crank out 2nm chips about three generations ahead.

Worse, Huawei's main production partner, Semiconductor Manufacturing International Corp., is struggling to churn out even 7nm chips at steady volumes. The Shanghai-based firm's 7nm production lines have been plagued by poor yield and reliability issues, according to another person. There's little guarantee that Huawei will be able to secure enough smartphone processors and AI chips in coming years, the person added.

Representatives for Huawei and SMIC didn't respond to messages and calls seeking comment.

Huawei's struggles reflect how years of US sanctions have scored initial success at freezing Chinese technology advancements at current levels, and deprived its national champions of the chance to graduate to the next level.