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Chinese technology giant Huawei might have enough chips to manufacture one million Ascend 910C AI chips, according to sources quoted in a fresh report by the Center for Strategic and International Studies (CSIS). The report quotes industry sources to reveal that China's primary chip manufacturer, the Semiconductor International Manufacturing Corporation (SMIC), has managed to overcome a key bottleneck in scaling its 7-nanometer semiconductor fabrication by acquiring US deposition and other chip manufacturing tools.
While SMIC cannot compete with Taiwan's TSMC in making either 7-nanometer or advanced chips, the CSIS adds that its partnership with Huawei can yield an EUV breakthrough courtesy of extensive resources dedicated to overcoming the key bottleneck.
China's SMIC Aiming To Manufacture 50,000 7-nanometer Wafers By 2025 End, Says Report
The CSIS's report covers DeepSeek's entry into the AI race and shares that while the Chinese AI model's ability to demonstrate lower costs is commendable, it is only a natural part of AI evolution. One factor that might have enabled the Chinese firm to develop its AI models is US government policy, which "inferred that Chinese customers would be restricted to using the" older NVIDIA V100 GPUs.
However, the report shares that government officials missed was that "Nvidia had a mechanism for post-manufacturing modification of its existing chip products," according to the CSIS. As per its report:
Industry sources confirmed to CSIS that Nvidia blew fuses on A100 chips to reduce their interconnect speed (but not their processing power) below the export control performance thresholds, thus creating the A800 product lines.
As a result, the A800 China-specific GPUs designed by NVIDIA to conform with US export restrictions closely resembled the A100 GPUs. CSIS adds that while the China-specific H800 did differ somewhat from the restricted H100 GPUs, demand for the A800 and H800 boomed, and the demand for the H100 and A100 GPUs from China was immaterial due to their similar performance parameters.
While DeepSeek has relied on NVIDIA's GPUs for its AI development, sanctions covering the latest GPUs have also forced it to consider alternatives. NVIDIA's key moat with its GPUs is the CUDA language, and as per CSIS, the Chinese AI company has also evaluated Huawei's CUDA alternative, CANN. However, it is unimpressed by CANN and according to sources, DeepSeek has assessed "that it would be years before the combination of Ascend chips and CANN-compatible software was a viable alternative."
US sanctions against Taiwan's TSMC have aimed to prevent Huawei from developing and producing the latest AI chips. Two of the Chinese firm's latest AI chips are its Ascend 910B and Ascend 910C chips.
According to the CSIS' government sources, ahead of the US sanctions, TSMC "manufactured more than 2 million Ascend 910B logic dies and that all of these are now with Huawei." Since one Ascend 910C ties two 910Bs together, this leads the researchers to conclude that Huawei can produce as many as one million Ascend 910C chips. As this process, called packaging, also introduces defects, CSIS's industry sources shared that "roughly 75 percent of the Ascend 910Cs currently survive the advanced packaging process."
While US and Dutch sanctions against China's SMIC have prevented it from acquiring EUV equipment to make the most advanced chips, older DUV equipment in its possession has enabled the firm to produce 7-nanometer chips. SMIC plans to significantly expand its 7nm production as it has acquired US etching, deposition and other tools used in chip manufacturing.
These tools can also help SMIC improve its 7nm yields from the currently dismal 20% for fully functional chips, outlines the CSIS. According to its report:
Industry sources told CSIS that SiEn, Pensun, and Huawei’s fab in Dongguan all were able to legally acquire the needed etching, deposition, and inspection/metrology equipment that SMIC needs for two reasons: (1) the equipment was not restricted on a country-wide basis to all of China and (2) the equipment was restricted on an end-use and end-user basis, but SiEn and Pensun told U.S. firms that it would exclusively be used for producing chips less advanced than 14 nm.
Through these machines, sources believe that "SMIC was targeting 50,000 WPM of 7 nm specifically by the end of 2025." Combined with a 20% yield rate, 50,000 wafers-per-month can allow it to manufacture 400,000 910C chips per month. Chinese firms SiEn and Pensun sold the equipment to SMIC, and the sale "was negotiated in Q4 of 2024 and completed in Q1 of 2025."
As a result, the report concludes that "all the margin for sloppy implementation of export controls or tolerance of large-scale chip smuggling has already been consumed. There is no more time to waste."
