Huawei's AI Chip Success Propels Its Influence in China's Server Industry
Huawei's popularity in the AI chip market has propelled its influence in China's server industry. Reports of Huawei potentially returning to assembling servers have impacted the market, with Digital China's shares falling. Huawei's computing business includes Kunpeng for general servers and Ascend for AI computing.
Huawei Technologies, the Chinese tech giant, has regained its influence in China's server industry, thanks to the popularity of its artificial intelligence (AI) chips.
This resurgence comes three years after Huawei was forced to divest its traditional server subsidiary due to US sanctions. Industry analysts have noted that Huawei's success in the AI chip market has propelled its position in the mainland's server sector.
The news of Huawei's growing influence has had a significant impact on the market. Shares of Digital China Group, a major player in China's server market, plummeted by 10% on the Shenzhen Stock Exchange following reports that Huawei may adjust its business model and return to assembling servers instead of solely providing key components.
While Huawei has not confirmed this move, the potential shift could disrupt companies like Digital China, which have been collaborating with Huawei to deliver server solutions to end-users. Huawei's computing business encompasses two product lines: Kunpeng for general servers and Ascend for AI computing. Several Chinese computer developers, including iSoftStone Information, Talkweb, Huakun, and xFushion, have also partnered with Huawei.
This collaborative approach has allowed Huawei to play a crucial role in China's AI infrastructure ecosystem, driven by Beijing's self-sufficiency initiative. The domestic demand for servers equipped with Huawei chips has been soaring, further solidifying Huawei's position in the market. Digital China, in response to the news, stated that it was business as usual and that its current exposure to Huawei was minimal.
The company clarified that Kunpeng and Ascend products accounted for only 3% of its total revenue. However, if Huawei decides to pursue a solo path, companies like Digital China would transition from being partners to mere distributors.
Huawei's resurgence in the server industry is a stark contrast to its situation a few years ago. In 2019, the company faced national security concerns and was placed on Washington's Entity List, leading to the sale of its wholly-owned subsidiary, xFushion.
The inability to acquire Intel x86 chips forced Huawei's hand. However, the company has since adjusted its AI strategy, focusing on building an ecosystem around its Kunpeng and Ascend servers powered by self-developed chips. This approach aims to cater to domestic clients who have lost access to equivalent technology from overseas.
Huawei's progress in overcoming key bottleneck technologies has been evident in recent years. At the Nanjing World Semiconductor Conference, a Huawei executive highlighted that its Ascend 910B AI chip is on par with Nvidia's A100.
The Ascend ecosystem, which includes AI computing architecture and related software platforms, boasts 40 hardware partners, 1,600 software partners, and 2,900 AI application solutions, according to Zhang Dixuan, head of Huawei's Ascend computing business.
In addition to its AI chip success, Huawei has introduced all-in-one machines to Chinese tech giants like Tencent Holdings and Baidu, as well as start-ups like iFlyTek.
Huawei's popularity in the AI chip market has propelled its influence in China's server industry.
Reports of Huawei potentially returning to assembling servers have impacted the market, with Digital China's shares falling.
Huawei's computing business includes Kunpeng for general servers and Ascend for AI computing.
Source: SCMP