China's Ambitious Plan to Triple AI Chip Production and Reduce Dependency on Nvidia

China Gets Closer to Finding Its Own Nvidia

A new China-buys-China narrative is taking shape as Beijing steps up its tech rivalry with the US. The world's second-largest economy not only wants to build generative AI models, but power them with its own hardware, redrawing a supply chain dominated by Nvidia Corp. There certainly is an opening after Nvidia reportedly halted production related to its H20 AI chip tailor-made for the Chinese market. Beijing had told tech companies to stop buying them due to national security concerns. Last week, DeepSeek released an upgrade to its flagship V3 model to accommodate the next generation of homegrown chips.

China seeks to triple output of AI chips in boost to DeepSeek ambitions

China's chipmakers are seeking to triple the country's total output of artificial intelligence processors next year, as domestic groups such as DeepSeek push for the semiconductors needed to match western rivals in developing the most advanced AI. One fabrication plant dedicated to producing Huawei's AI processors is scheduled to start production as soon as the end of this year, while two more are due to launch next year, said two people with knowledge of the plans. While the new plants are designed to specifically support Huawei, it is not clear who exactly owns them. Huawei denied having plans to launch its own fabs and did not provide further details. Combined capacity from these three new plants, once fully ramped up, could exceed the current total output of similar lines at Semiconductor Manufacturing International Corporation (SMIC), China's leading fab, according to those people with knowledge of the effort. The people added that SMIC also planned to double its capacity next year for making chips at 7 nanometres -- the most advanced mass produced in China. Huawei is SMIC's largest customer at present for such processor lines. As a result, smaller Chinese chip designers such as Cambricon, MetaX and Biren will be able to get much larger allocations of SMIC's capacity, spurring competition for a fast-growing China market left by Nvidia following US export bans. Semiconductors are at the heart of trade tensions between Beijing and Washington. The US has restricted access to the top AI processors made by global leader Nvidia, in an effort to restrain Chinese efforts to develop AI. "Domestic output won't be an issue for long, especially with all the capacity coming online next year," said one Chinese chipmaker executive. Chinese companies are also racing to develop the next generation of AI chips adaptable to a standard advocated for by DeepSeek, which has emerged as the country's leading AI start-up. DeepSeek announced last week that its models were now using a type of FP8 data format, designed to adapt to the next generation of domestic chips, without specifying from which supplier. Share prices of listed Chinese semiconductor companies such as Cambricon and SMIC surged following the announcement. Huawei's 910D as well as Cambricon's 690 are seen as leading products tailored to support Deepseek's preferred standards, while multiple smaller Chinese chipmakers are also accelerating the development of their versions. DeepSeek chose this data format because it increases the efficiency of hardware, at the cost of precision, which could create a way to help Chinese AI players compete with international rivals even if their chips are generations behind Nvidia's leading offerings. "If we succeed in developing and optimising these Chinese chips to train and run Chinese models in a continuously evolving Chinese ecosystem, one day we will look back at this shift as an even more significant DeepSeek moment," said the chipmaker's executive. "This unprecedented alignment could make up for our less advanced hardware capability." However, such an effort would require a years-long collaboration between makers of computing chips with those making hardware for memory and connectivity, as well as software tools required to support them. China is making pushes in other critical areas as well, such as memory chips, at present dominated by Samsung, SK Hynix and Micron -- all subject to US export controls. Leading Chinese player CXMT is testing samples of "HBM3" high bandwidth memory products with a target to launch next year, according to two people with knowledge of the matter. The product is only one generation behind the most advanced memory products used by Nvidia's chips. While DeepSeek has done early work on Chinese chips in small samples, to prove that it is technically viable, the group's current model training is done on Nvidia chip clusters, the Financial Times has reported. This could change once more Chinese domestic chips become adaptable to its standard and improve their performance. "Necessity begets innovation," said an investor in multiple Chinese semiconductor and large language model start-ups. "Companies in Silicon Valley won't even bother to do what DeepSeek is doing because they can get as many advanced Nvidia chips as they want." Beijing is putting significant political and financial support behind such pushes. The State Council called this week for greater AI adoption in the country, as well as "integrated and co-ordinated development of AI-driven technology research and development, engineering implementation, and product commercialisation". Cambricon, listed in Shanghai, received approval to raise about $600mn this year. Four smaller AI chipmakers, including Biren and MetaX, are seeking to go public as soon as the end of this year, having raised about $3bn combined in pre-IPO rounds. If successful, the push to create alignment between China's AI hardware and software companies could meet DeepSeek's founder Liang Wenfeng's call to challenge Nvidia's global lead. "Nvidia's lead is not created by a single company, but a collaborative effort by the whole western community and industry," Liang told Chinese media last year. "China's AI development needs the same ecosystem. China needs someone to stand at the forefront of such development." SMIC, Cambricon, DeepSeek, CXMT, Biren and MetaX did not respond to the FT's request for comment.

China aims to triple AI chip output, reducing Nvidia's dependency, FT says

Aug 27 (Reuters) - China's chipmakers are seeking to triple the country's output of artificial intelligence chips in 2026, rushing to reduce dependence on Nvidia (NVDA.O), opens new tab, the Financial Times reported on Wednesday. Huawei (HWT.UL) aims to begin production at a plant dedicated to making AI chips by year end, with two more facilities set to launch in 2026, the newspaper said citing people familiar with the matter. The plants are designed to specifically support Huawei, but their ownership remains unclear. Huawei told the FT that it did not have plans for its own plants. The combined output from the three potential plants could surpass the current production capacity of similar lines at China's top chipmaker, Semiconductor Manufacturing International Corporation (SMIC), the FT said. SMIC plans to next year double manufacturing capacity for 7 nanometre chips, for which Huawei is its largest customer, the report said. Huawei and SMIC did not immediately respond to Reuters requests for comment. Beijing is accelerating work on domestic AI chips, with companies developing processors that rival the performance of Nvidia's China-special H20, about which the government has expressed security concerns. Reuters reported in November that Huawei planned to start mass-producing its most advanced AI chip in the first quarter of 2025 despite grappling with the impact of U.S. restrictions. Reporting by Dheeraj Kumar and Gursimran Kaur in Bengaluru Our Standards: The Thomson Reuters Trust Principles., opens new tab

China Is Expected to Significantly Increase AI Chip Production in the Coming Years as Beijing Aims for '100% Self-Sufficiency' By 2027

China has reportedly expanded its pursuit of developing AI technology on home soil, as the nation is expected to increase AI chip production by threefold in just a few years. When you look at the recent geopolitical situation, it is clear that Beijing is pivoting away from Western AI hardware solutions, and while this move will take several years, China is preparing ahead of time. According to a new report by The Financial Times, it is claimed that the nation intends to increase its AI chip production by up to 3x within the next few years, and this move will benefit the likes of Huawei, DeepSeek, and Cambricon, which are the most capable domestic AI firms for now. It is claimed that a dedicated fab for Huawei's AI chips is expected to come online by year-end, with two more facilities in the pipeline as well, which are slated for production by next year. The combined capacity from these plants is claimed to rival SMIC's production figures, which shows that domestic AI firms are indeed scaling up the Chinese semiconductor industry. More importantly, SMIC themselves are looking to double 7nm production by 2026, which shows that the demand for homegrown nodes is higher than ever with the AI frenzy. China's AI chip solutions are much better positioned to rival NVIDIA than they were a few years ago, with options such as Huawei's Ascend 910D and Cambricon's 690 leading the race. Interestingly, DeepSeek revealed a few days ago that they were switching up AI models to be tailored to the FP8 format, which no Chinese AI chip offers as of right now. However, there are signs that a solution has been developed, most likely by Cambricon, judging by its recent stock price soar. Reducing reliance on foreign hardware has become a national priority, which is why a report from Ctee claims that the People's Government of Beijing Municipality is seeking 100% self-reliance in AI compute. For now, China is way behind the likes of NVIDIA, but the region is seeing breakthroughs in multiple segments, such as chip processes, high-bandwidth memory, and packaging technologies. This indicates that a robust ecosystem is in the process of being developed that would help Chinese AI firms come up with capable solutions.

China aims to triple AI chip output, reducing Nvidia's dependency, FT says

(Reuters) -China's chipmakers are seeking to triple the country's output of artificial intelligence chips in 2026, rushing to reduce dependence on Nvidia, the Financial Times reported on Wednesday. Huawei aims to begin production at a plant dedicated to making AI chips by year end, with two more facilities set to launch in 2026, the newspaper said citing people familiar with the matter. The plants are designed to specifically support Huawei, but their ownership remains unclear. Huawei told the FT that it did not have plans for its own plants. The combined output from the three potential plants could surpass the current production capacity of similar lines at China's top chipmaker, Semiconductor Manufacturing International Corporation (SMIC), the FT said. SMIC plans to next year double manufacturing capacity for 7 nanometre chips, for which Huawei is its largest customer, the report said. Huawei and SMIC did not immediately respond to Reuters requests for comment. Beijing is accelerating work on domestic AI chips, with companies developing processors that rival the performance of Nvidia's China-special H20, about which the government has expressed security concerns. Reuters reported in November that Huawei planned to start mass-producing its most advanced AI chip in the first quarter of 2025 despite grappling with the impact of U.S. restrictions. (Reporting by Dheeraj Kumar and Gursimran Kaur in Bengaluru)