How Huawei ascended from telecoms to China’s ‘jack of all trades’ AI chief

Regardless of being overwhelmed down by years of U.S. commerce restrictions, China’s telecom large Huawei has quietly emerged as one of many nation’s fiercest opponents throughout the whole AI panorama.  

Not solely does the Shenzhen-based agency seem to symbolize Beijing’s reply to American AI chip darling Nvidia, but it surely has additionally been an early adopter of monetizing synthetic intelligence fashions in industrial functions. 

“Huawei has been pressured to shift and develop its core enterprise focus over the previous decade… on account of quite a lot of exterior pressures on the corporate,” mentioned Paul Triolo, accomplice and senior vice chairman for China at advisory agency DGA-Albright Stonebridge Group.

This enlargement has seen the corporate get entangled in all the pieces from sensible vehicles and working programs to the applied sciences wanted for the AI growth, resembling superior semiconductors, knowledge facilities, chips and huge language fashions. 

“No different expertise firm has been capable of be competent in so many alternative sectors with excessive ranges of complexity and boundaries to entry,” Triolo mentioned. 

This 12 months, Nvidia CEO Jensen Huang has turn out to be more and more vocal in calling Huawei “probably the most formidable expertise corporations on the planet.” He has additionally warned that Huawei will change Nvidia in China if Washington continues to limit U.S. chip companies’ exports to the Asian nation.

Nvidia surpassed $4 trillion in market capitalization final week to turn out to be the world’s most precious firm. Its cutting-edge processors and a associated “CUDA” computing system stay the {industry} commonplace for coaching generative AI fashions and functions. 

However that moat could also be narrowing, as Huawei proves that it not solely does all of it, it does it nicely. Whereas difficult American AI stalwarts like Nvidia is a tall order, the corporate’s historical past reveals why it will possibly’t be counted out.

Huawei, which now employs greater than 208,000 folks throughout over 170 markets, got here from humble beginnings. Based by bold entrepreneur Ren Zhengfei in 1987 out of an condominium in Shenzhen, the agency began as a small phone swap distributor.

Because it grew right into a telecoms participant, it gained traction by concentrating on much less developed markets resembling Africa, the Center East, Russia and South America, earlier than finally increasing to locations like Europe.

By 2019, Huawei can be well-positioned to capitalize on the international 5G rollout, turning into a pacesetter available in the market. Round this time, it had additionally blossomed into one of many world’s largest smartphone producers and was even designing smartphone chips by means of its chip design subsidiary, HiSilicon. 

However Huawei’s success additionally attracted rising scrutiny from governments exterior China, significantly the U.S., which has incessantly accused Huawei’s expertise of posing a nationwide safety risk. The Chinese language firm has refuted such dangers. 

Huawei’s enterprise suffered a significant setback in 2019 when it was positioned on a U.S. commerce blacklist, stopping American corporations from doing enterprise with it. 

Because the impression of the sanctions kicked in, Huawei’s client enterprise – as soon as the corporate’s largest by income – halved to about $34 billion in 2021 from the 12 months earlier than.

The corporate nonetheless managed a breakthrough on AI chips, and pressed forward regardless of further U.S. restrictions in 2020 that reduce the corporate off from chipmaker Taiwan Semiconductor Manufacturing Co. A 12 months earlier, Huawei formally launched its Ascend 910 AI processing chip as a part of a method to construct a “full-stack, all-scenario AI portfolio” and to turn out to be a supplier of AI computing energy.

However the U.S. concentrating on of Huawei additionally had the impact of turning the corporate right into a martyr-like determine in China, constructing upon consideration it obtained in 2018 when Meng Wanzhou, Huawei’s CFO and daughter of Ren, was arrested in Canada for alleged violations of Iran sanctions.

Because the U.S.-China tech conflict continued to develop and broad superior chip restrictions had been positioned on China, Huawei was an apparent option to turn out to be a nationwide champion within the race, with extra impetus and state backing for its AI plans. 

“The export controls have satirically pushed Huawei into the arms of the Chinese language authorities in a approach that CEO Ren Zhengfei at all times resisted,” Triolo mentioned. On this approach, the restrictions additionally turned “the steroids” for Huawei’s AI {hardware} and software program stack.

After one other 12 months of declining gross sales within the client phase, the unit began to show round in 2023 with the discharge of a smartphone that analysts mentioned contained a sophisticated chip made in China. 

The 5G chip got here as a shock to many within the U.S., who did not anticipate Huawei to succeed in that degree of development so shortly with out TSMC. As a substitute, Huawei was reportedly working with Chinese language chipmaker SMIC, an organization that has additionally been blacklisted by the U.S.

Whereas semiconductor analysts mentioned the size that Huawei and SMIC might produce these chips was severely restricted, Huawei nonetheless had proved it was again within the superior chip recreation. 

It was additionally round this time that experiences started surfacing about Huawei’s new AI processor chip, the Ascend 910B, with the corporate seeking to seize upon gaps left by export controls on Nvidia’s most superior chips. Mass manufacturing of the next-generation 910C is reportedly already on the best way. 

To fill the void left by Nvidia, Huawei “has been making massive strides in replicating the efficiency of high-end GPUs utilizing mixtures of decrease chips,” mentioned Jeffrey Towson, managing accomplice at TechMoat Consulting.

In April, Huawei unveiled its “AI CloudMatrix 384”, a system that hyperlinks 384 Ascend 910C chips in a cluster inside knowledge facilities. Analysts have mentioned CloudMatrix is ready to outperform Nvidia’s system, the GB200 NVL72, on some metrics.

Huawei is not simply catching up, “it is redefining how AI infrastructure works,” Forrester analysts mentioned in a report final month about CloudMatrix.

In the meantime, Huawei has additionally developed its personal “CANN” software program system that acts as a substitute for Nvidia’s CUDA. 

“Successful the AI race is not nearly quicker chips. It additionally consists of delivering the instruments builders have to construct and deploy large-scale fashions,” Forrester’s report mentioned, although authors famous that Huawei’s merchandise are nonetheless not built-in sufficient with different generally used instruments for builders to modify over shortly from Nvidia.

Whereas Huawei’s objective to surpass Nvidia is seen as a key growth in China and the U.S.’s race for AI, it is necessary to notice that chips symbolize only one constructing block of Huawei’s broader AI plans. 

Huawei now has its palms all through the unreal intelligence worth chain, from chips to computing, to AI fashions and AI functions. These totally different AI enterprise avenues additionally leverage different areas of the corporate’s huge expertise empire. 

In reality, the corporate’s “ICT Infrastructure” enterprise — which incorporates 5.5G mobile community deployment and AI programs for industrial use — turned the corporate’s largest income driver at 362 billion yuan in 2023.

The corporate has been deploying its Ascend AI chips and AI CloudMatrix 384 at its rising portfolio of AI knowledge facilities, that are operated by its cloud computing unit, Huawei Cloud, established in 2017 to compete with the likes of Amazon Internet Providers and Oracle. 

These knowledge facilities, in flip, have supplied the coaching capabilities and computing energy utilized by Huawei’s suite of AI fashions beneath its Pangu collection. 

Not like different general-purpose AI fashions like OpenAI’s GPT-4 or Google’s Gemini Extremely 1.0, Huawei’s Pangu mannequin is designed to assist extra industry-specific functions throughout the medical, finance, authorities, industrial and automotive sectors. Pangu has already been utilized in additional than 20 industries over the past 12 months, the corporate mentioned final month. 

Rolling out such AI functions typically entails having Huawei tech workers working for months on the mission website, even when it is in a distant coal mine, Jack Chen, vice chairman of the advertising division for Huawei’s oil, fuel and mining enterprise unit, which gives digital and clever options to remodel these industries, instructed CNBC.

That analysis enabled the corporate in Could to deploy extra 100 electric-powered vehicles that may autonomously transport dust or coal utilizing the telecom firm’s 5G community, AI and cloud computing companies.

And it is not restricted to China. The expertise can “be replicated on a big scale in Central Asia, Latin America, Africa, and the Asia-Pacific,” Chen mentioned.

Huawei has additionally open-sourced the Pangu fashions, in a transfer it mentioned would assist it develop abroad and additional its “Ascend ecosystem technique,” which refers to its AI merchandise constructed round its Ascend chips.

Chatting with CNBC’s “Squawk Field Asia” on Thursday, Patrick Moorhead of Moor Insights & Technique mentioned he anticipated Huawei to push Ascend in international locations a part of China’s Belt and Highway Initiative — an funding and growth mission aimed toward rising markets. 

Over a interval of 5 to 10 years, the corporate might start to construct severe market share in these international locations, in the identical approach it as soon as did with its telecommunications enterprise, he added.