Blog | Huawei trims phone output due to high AI chip demand, per sources

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Huawei trims phone output due to high AI chip demand, per sources

5 février 2024

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Huawei is reportedly facing a slowdown in the production of its premium Mate 60 smartphones due to an unprecedented demand for its artificial intelligence (AI) chips, as well as manufacturing constraints. The Chinese tech giant, grappling with challenges stemming from US sanctions in 2019, has been compelled to prioritize the production of its Ascend AI chips over the Kirin chips that fuel its flagship phones.

According to sources familiar with the matter, Huawei utilizes a single facility for manufacturing both Ascend AI chips and Kirin chips, the latter being comparable to the ones powering Apple's iPhone. However, production has been hampered by a low yield rate, indicative of potential quality issues. This development comes amidst a global race for AI capabilities, particularly in the context of the ongoing technological rivalry between the US and China.

Despite Huawei's recent triumph in Chinese smartphone sales, marking the first time in over three years that it has secured the top position, the production slowdown for the Mate 60 phones sheds light on the intricate challenges the company faces. The impact of US restrictions on AI processing chip sales to China is evident, with Nvidia losing its dominant 90% control of the Chinese market following October's stringent curbs.

In response to these challenges, the Chinese government has initiated efforts to enhance the country's computing power, leading to increased demand for Huawei's Ascend series. The Ascend 910B, recognized as a highly competitive non-Nvidia AI chip in China, has garnered attention amid the push for domestic alternatives.

Huawei's strategic decision to prioritize Ascend chip production over Kirin chips has resulted in the slowing down of Mate 60 smartphone manufacturing. The company is reportedly working to improve its yield rate, hoping that the production adjustment is a short-term measure. Huawei has been discreet about its chip manufacturing capabilities, and the scarcity of public information on its progress adds an element of mystery to its advancements.

Despite the production bottleneck affecting various Huawei products, including the Ascend-equipped computing unit MDC 810, which powers advanced driver assistance systems, the Mate 60 series played a pivotal role in the company regaining its status as China's leading smartphone seller in the early weeks of 2024. However, reports indicate that the series has faced stock shortages, with potential buyers expressing dissatisfaction over extended waiting times for pre-orders to be fulfilled. The production issues have also impacted Chinese automakers, leading to delays in delivering flagship models equipped with the affected MDC 810.

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Huawei trims phone output due to high AI chip demand, per sources


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