Huawei is making headlines with plans to establish a massive chip production facility in China, focusing on its in-demand Kirin and Ascend chips. This ambitious “mega-facility” aims to elevate Huawei’s status in the AI sector, challenging industry giants like NVIDIA.
Over recent years, Huawei has evolved remarkably from a mobile phone-centric firm to a major player in artificial intelligence. The Ascend AI chips have been particularly successful, creating a supply-demand imbalance due to the constraints of current production lines. This new facility, reported by the Financial Times to be located in Shenzhen, is part of Huawei’s strategy to vertically integrate its AI supply chain, ensuring more efficient production and distribution.
The Shenzhen plant is anticipated to handle the production of 7nm chips and above, particularly for Kirin mobile processors and Ascend AI chips. Proximity to other Chinese foundries such as Pengxinwei (PXW) and Shenzhen Pensun (PST) suggests Huawei is building a centralized hub, streamlining the sourcing and manufacturing process. This move not only accelerates production but also strengthens the connectivity between Huawei and its partners.
Local government funding supports this project, although Huawei itself won’t directly manage the facilities. Instead, companies like SiCarrier and SwaySure will take the helm. Huawei will initially involve itself by providing funding and dispatching management and technical expertise, creating an extensive ecosystem of partners to oversee the entire supply chain efficiently. This strategic network is a key factor in Huawei’s impressive growth trajectory.
The decision to embark on this new semiconductor venture follows the inability of China’s leading semiconductors firm, SMIC, to meet existing demands. With millions of orders for its Ascend AI chips, Huawei recognizes an urgent need to scale up production. The Shenzhen facility could be operational as early as next year, representing a significant step toward Huawei achieving sustainable advances in chip technology.
