Exclusive-AI chip demand forces Huawei to slow smartphone production – source

By Fanny Potkin and Julie Zhu

SINGAPORE/HONG KONG (Reuters) – A growing appetite for Huawei’s artificial intelligence (AI) chips as well as manufacturing constraints have forced the Chinese tech giant to prioritize AI and slow production for its premium Mate 60 phone. , people familiar with the matter said.

Huawei uses a facility that produces both its Ascend AI chips and the Kirin chips that power Apple’s iPhone rival, three of the people said, two of whom said output was hampered by low yield rates. is – a proxy for production quality.

But a global race for AI functionality amid the China-US tech standoff has left Huawei in second place in its handsets, just as the company has topped Chinese smartphone sales for the first time in more than three years.

Huawei declined to comment.

The situation offers a rare glimpse of Huawei’s challenges as it works to rebuild after US sanctions in 2019 cut off access to advanced chip manufacturing equipment and disabled its smartphone unit on national security grounds. Huawei has denied that this is a security risk.

It also reflects the impact of US sanctions on sales of AI processing chips to China, a market that was 90% controlled by US giant Nvidia before the latest sanctions in October pushed Chinese customers towards domestic alternatives.

The government has launched an initiative to improve China’s position in computing power. This has prompted local authorities to announce data center projects, boosting public and private demand, particularly for Huawei’s Ascend series, according to the two people and public tenders.

The Ascend 910b is widely considered to be the most competitive non-Nvidia AI chip available in China.

Huawei has prioritized the production of Ascend chips over Kirin chips and has therefore slowed down manufacturing for the Mate 60 smartphone, the people said…

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