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

Regardless of being crushed 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 complete AI panorama.  

Not solely does the Shenzhen-based agency seem to signify 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 purposes. 

“Huawei has been pressured to shift and broaden its core enterprise focus over the previous decade… as a consequence of a wide range of exterior pressures on the corporate,” mentioned Paul Triolo, associate and senior vice chairman for China at advisory agency DGA-Albright Stonebridge Group.

This growth has seen the corporate get entangled in every thing from good automobiles and working techniques to the applied sciences wanted for the AI growth, equivalent to superior semiconductors, information facilities, chips and enormous language fashions. 

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

This yr, Nvidia CEO Jensen Huang has turn out to be more and more vocal in calling Huawei “probably the most formidable expertise firms on the earth.” He has additionally warned that Huawei will substitute 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 worthy firm. Its cutting-edge processors and a associated “CUDA” computing system stay the {industry} normal for coaching generative AI fashions and purposes. 

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

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

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

By 2019, Huawei could be well-positioned to capitalize on the international 5G rollout, turning into a frontrunner out there. Round this time, it had additionally blossomed into one of many world’s largest smartphone producers and was even designing smartphone chips via its chip design subsidiary, HiSilicon. 

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

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

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

The corporate nonetheless managed a breakthrough on AI chips, and pressed forward regardless of extra U.S. restrictions in 2020 that lower the corporate off from chipmaker Taiwan Semiconductor Manufacturing Co. A yr earlier, Huawei formally launched its Ascend 910 AI processing chip as a part of a technique 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. focusing on of Huawei additionally had the impact of turning the corporate right into a martyr-like determine in China, constructing upon consideration it acquired 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 warfare continued to broaden 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 paradoxically 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 yr of declining gross sales within the shopper 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 stage of development so rapidly 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 dimensions 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 stories 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 large strides in replicating the efficiency of high-end GPUs utilizing combos of decrease chips,” mentioned Jeffrey Towson, managing associate at TechMoat Consulting.

In April, Huawei unveiled its “AI CloudMatrix 384”, a system that hyperlinks 384 Ascend 910C chips in a cluster inside information 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 an alternative choice to Nvidia’s CUDA. 

“Successful the AI race is not nearly quicker chips. It additionally contains 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 rapidly from Nvidia.

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

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

In contrast to 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 purposes throughout the medical, finance, authorities, industrial and automotive sectors. Pangu has already been utilized in additional than 20 industries during the last yr, the corporate mentioned final month. 

Rolling out such AI purposes typically includes having Huawei tech employees working for months on the challenge web site, even when it is in a distant coal mine, Jack Chen, vice chairman of the advertising and marketing division for Huawei’s oil, gasoline and mining enterprise unit, which gives digital and clever options to remodel these industries, advised CNBC.

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

And it isn’t 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 broaden abroad and additional its “Ascend ecosystem technique,” which refers to its AI merchandise constructed round its Ascend chips.

Talking to 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 challenge geared toward rising markets. 

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