China Ambitiously Produces Threefold AI Chips To Reduce Dependence On Nvidia

Illustration of the Nvidia H20 chip for the Chinese market (photo: x @BarrettYouTube)

JAKARTA - The Chinese government is working to double the production of artificial intelligence (AI) chips by 2026. This is a step to reduce dependence on Nvidia, according to the Financial Times report on Wednesday, August 27.

Huawei plans to start production at a factory dedicated to the manufacture of AI chips before the end of this year, with two additional facilities scheduled to start operating in 2026, the report said, citing sources familiar with the plan.

Although designed to support Huawei, the ownership of these three factories is still unclear. Huawei told the FT that they have no plans to build their own factories.

The combination of outputs from these three potential factories is expected to exceed current production capacity from similar lines in China's largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC). SMIC itself plans to double its 7 nanometer chip production capacity next year, where Huawei is its biggest customer, according to the report.

The Beijing government is accelerating the development of domestic AI chips, with local companies developing processors that could rival the performance of the H20 chip specifically for the Nvidia-owned Chinese market, which has raised security concerns from the Chinese government.

Reuters once reported in November that Huawei plans to start mass production of its most advanced AI chip in the first quarter of 2025, despite facing challenges due to restrictions from the United States.