<p>According to those familiar with the situation, Huawei was compelled to prioritize artificial intelligence (AI) and hold down production of its high-end Mate 60 phones due to the growing demand for its artificial intelligence (AI) processors and manufacturing limitations.</p>
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<p>According to three sources, Huawei employs a single facility to produce both the Kirin processors that power its competitor smartphone from Apple and its Ascend AI chips. Two of the sources said that poor yield rates, which are a good indicator of manufacturing quality, had hampered productivity.</p>
<p>However, a worldwide competition for artificial intelligence capabilities amidst a Sino-US technical impasse has seen Huawei slide to the second position for its devices, even as the company leads China’s smartphone sales for the first time in over three years.</p>
<p><strong>Huawei opted not to respond.</strong></p>
<p>The circumstances provide a unique look into Huawei’s difficulties as it attempts to recover from the crippling of its smartphone division and the cutting off of access to sophisticated chipmaking equipment due to U.S. sanctions in 2019 on national security grounds. Any security danger is refuted by Huawei.</p>
<p>It also shows how American limitations have affected sales of AI processing chips to China, a market that the US company Nvidia dominated to the tune of 90% until the most recent restrictions in October forced Chinese consumers to turn to local options.</p>
<p>China’s standing in terms of computer power has improved thanks to a government program. According to two of the sources and public bids, this has encouraged local authorities to launch data center projects while increasing private and public demand for Huawei’s Ascend series in particular.</p>
<p>Most people agree that the Ascend 910B is the most competitive AI processor available in China that isn’t Nvidia.</p>
<p>According to the sources, Huawei has slowed down the manufacture of Mate 60 smartphones in order to focus on producing Ascend chips rather than Kirin processors. They did not say when this arrangement started.</p>
<p><strong>LOW KEY</strong></p>
<p>Huawei has been very secretive about its ambitions and capabilities for chip manufacturing, and the public knows very little about the company’s development or how it has produced cutting-edge processors.</p>
<p>As U.S. Commerce Secretary Gina Raimondo visited China in August, the company shocked market observers by launching the Mate 60 series without a flag, demonstrating its technological prowess.</p>
<p>The phones have a Chinese-made processor that could support fifth-generation (5G) communications speeds, according to online teardowns. Experts speculated that Huawei may have accomplished this by modifying deep ultraviolet lithography equipment with assistance from SMIC, the biggest contract chipmaker in China.</p>
<p>Analysts noted that this procedure is more time-consuming, costly, and probably less effective than using the more sophisticated extreme UV devices that the US has banned other nations from supplying to China.</p>
<p>Mate 60 smartphones have been systematically out of stock, and prospective customers have been complaining online about months-long wait periods for their pre-orders to be completed.</p>
<p>Nevertheless, according to data source Counterpoint, the series had a major role in Huawei becoming the country’s top smartphone seller in the first two weeks of 2024—a position it had held since the end of 2020.</p>
<p>According to two other sources, the Ascend-equipped computer unit MDC 810, which supports sophisticated driving assistance systems, is one of the other Huawei products impacted by the manufacturing bottleneck.</p>
<p>Production problems with the MDC 810 forced Chinese automakers to postpone delivering premium models, as Reuters revealed last week.</p>
Production of Huawei smartphones slows down as a result of high demand for AI chips
