US curbs may accelerate Huawei’s rise in Chinese AI market, says chip firms

New U.S. trade restrictions on China are fueling concerns among chip firms as they believe these curbs can help Huawei rise in the Chinese AI market. Looks like the concern is right, as the tech giant is constantly developing new AI processors.

The New York Times reported that US curbs are becoming a major point of stress for foreign chip producers like Nvidia. These trade regulations are not only killing the hope of better sales revenue but also raising fears of Huawei’s growth.

According to the report, the Trump administration has now come out with some new AI chip supply rules this week. Under these regulations, firms like Nvidia, Intel, and Micro Devices are restricted to sell their AI chips in China.

Flashback

US curbs aren’t a new thing for the Huawei AI chip business in China. The foreign government banned the Chinese firm in 2019 over security risks and continues to create hurdles for it in every segment by prohibiting its access to cutting-edge tech.

But over time, Huawei made significant strides in the AI field. It has turned to native partners and used alleged stockpiled technologies to improve its chips. Looks like the company’s efforts have gradually started paying off.

Back to Report…

In particular, China is one of the largest AI chip markets for Nvidia. But the new US curbs are somewhat putting a halt to the company’s growing business. After the regulations announcement, Nvidia’s shares fell 8.4% and Intel was down by 6.8%.

Nvidia CEO – Huang Renxun made a trip to China this week and met some Chinese leaders to discuss strategies for its business in the respective country.

Nvidia CEO – Huang Renxun (Image Credits: Nvidia)

“We’re going to continue to make significant efforts to optimize our products that are compliant with the regulations and continue to serve China’s market.” – said Mr. Huang at a meeting with the China Council.

The CEO further revealed his concerns about the growth of Huawei in the Chinese AI market, following the latest US curbs. He warns the US officials that restricting US firms from participating in China’s AI competition would give rise to Huawei.

Gregory C. Allen, Director of the Strategic and International Studies Center, said:

“Nvidia’s previous generation of chips performs about 40% better than Huawei’s best product. But that gap could dwindle if Huawei scoops up the business of its American rivals.”

He added that Huawei could hire more experienced engineers and make higher-quality chips after the latest move. It could work with firms like DeepSeek that can help improve software to develop more reliable chips.

US curbs may accelerate Huawei’s rise in the Chinese AI market, says chip firms (Image Credits: Weibo)

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