Khushi Kaushal, 11 March 2025.
Nvidia and the Intensifying Competition from Huawei
During the US Sanctions, Nvidia acknowledged Huawei as a formidable competitor despite ongoing US sanctions against the Chinese tech company. Their newly released annual filing has included Huawei among its key competitors for the second consecutive year, highlighting the increasing technological influence of the Chinese firm.
Legal and Regulatory Challenges
Since 2019, the US government has kept a keen eye on Huawei, as they have raised national security concerns. The wide range of sanctions includes bans on U.S. firms supplying the Chinese company with advanced semiconductor technology, software, and other critical components. Huawei’s placement on the U.S. Commerce Department’s Entity List has seen notable restrictions on its access to American-made technologies, compelling it to seek alternative supply chains.
However, these sanctions have not stopped Huawei from maintaining its place as an intense tech competition, as seen by NvidNvidia'sognition of Huawei as a key competitor in various technology sectors, particularly semiconductors and AI-driven computing. The US laws, including the Export Administration Regulations (EAR), have also sought sanctions against NNvidNvidia'stability o sell its high-end AI chips, such as the A100 and H100, to China. Nevertheless, Nvidia has found a loophole and created downgraded versions of its chips, the A800 and H800, specifically for the Chinese market. Unfortunately for Nvidia, these adjustments have not stopped Huawei from advancing its AI and semiconductor capabilities.
Huawei’s Growing Market Influence
Nvidia CEO Jensen Huang underscored the intensity of the competition in China, stating, “Huawei, other companies, are ... quite vigorous and very, very competitive.” The legal battle between the U.S. and Chinese tech firms has reached sky highs, with the U.S. imposing further controls that are preventing China’s access to cutting-edge AI and semiconductor technologies.
Legal Loopholes
A recent report published by the Center for Strategic and International Studies (CSIS) assesses how ChinChina'siconductor International Manufacturing Corporation (SMIC) has managed to navigate US trade restrictions. By having access to critical US chip manufacturing tools through intermediary firms, SMIC has improved its 7-nanometer semiconductor fabrication capabilities. These legally ambiguous areas in export control policies have allowed Huawei to sustain its semiconductor production despite US and Dutch efforts to restrict China from advanced chipmaking equipment.
Furthermore, many reports suggest that before enforcing stricter sanctions, Taiwan Semiconductor Manufacturing Company (TSMC) had already produced over 2 million Ascend 910B logic dies for Huawei. Since each Ascend 910C AI chip consists of two 910B chips, in theory, Huawei has enough supply to manufacture up to one million AI chips, but production challenges may impact the final output
The Battle for AI and Cloud Monopolisation
Huawei’s legal loopholes extend beyond just hardware, to also software. U.S. sanctions have also restricted Chinese firms’ access to Nvidia’s proprietary CUDA software - which is a dominant force in AI computing. Huawei has responded to this by developing its own alternative- CANN.
Legal experts have agreed that CANN is not a sustainable replacement for the current systems, as it may take years before HuawHuawei'schips and software ecosystem becomes a sufficient alternative to NvidNvidia'shile Nvidia has attempted to adjust its product offering in China, the legal obstacles imposed by the US continue to present challenges and stricter export controls. Nvidia has undoubtedly seen a significant impact on their revenue streams, as Huang has stated that NvidNvidia'senue from China has already halved since the introduction of stringent export controls.
Future Legal Implications and Impact of the Industry
The intense competition between Nvidia and Huawei goes beyond business rivalry, as it also signifies the geopolitical and legal struggles that may reshape the future of the global semiconductor industry. Looking forward, the US government intends to introduce further measures to restrict Chinese tech firms from acquiring high-performance AI chips, which may potentially force Nvidia to revise its strategies once more.
For Huawei, the ongoing legal scrutiny and further potential sanctions will most likely impact their ability to develop more advanced AI and semiconductor technologies. But considering their current strategies, they are likely to smoothly navigate these challenges.
The coming years will be essential in determining how effective these companies are in their ability to innovate while adhering to international trade laws.
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