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CNBC
2 days ago
- Business
- CNBC
China's Huawei open-sources AI models as it seeks adoption across the global AI market
Huawei has open-sourced its artificial intelligence models — a move tech experts say will help the U.S.-blacklisted firm continue to build its AI ecosystem and expand overseas. The Chinese tech giant announced on Monday the open-sourcing of two of its AI models under its Pangu series, as well as some of its model reasoning technology. The moves are in line with other Chinese AI players that continue to push an open-source development strategy. Baidu also open-sourced its large language model series Ernie on Monday. Tech experts told CNBC that Huawei's latest announcements not only highlight how it is solidifying itself as an open-source LLM player, but also how it is strengthening its position across the entire AI value chain as it works to overcome U.S.-led AI chip export restrictions. In recent years, the company has transformed from a competent private sector telecommunications firm into a "muscular technology juggernaut straddling the entire AI hardware and software stack," said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group. In its announcement Monday, Huawei called the open-source moves another key measure for Huawei's "Ascend ecosystem strategy" that would help speed up the adoption of AI across "thousands of industries." The Ascend ecosystem refers to AI products built around the company's Ascend AI chip series, which are widely considered to be China's leading competitor to products from American chip giant Nvidia. Nvidia is restricted from selling its advanced products to China. Pangu being available in an open-source manner allows developers and businesses to test the models and customize them for their needs, said Lian Jye Su, chief analyst at Omdia. "The move is expected to incentivize the use of other Huawei products," he added. According to experts, the coupling of Huawei's Pangu models with the company's AI chips and related products gives the company a unique advantage, allowing it to optimize its AI solutions and applications. While competitors like Baidu have LLMs with broad capabilities, Huawei has focused on specialized AI models for sectors such as government, finance and manufacturing. "Huawei is not as strong as companies like DeepSeek and Baidu at the overall software level – but it doesn't need to be," said Marc Einstein, research director at Counterpoint Research. "Its objective is to ultimately use open source products to drive hardware sales, which is a completely different model from others. It also collaborates with DeepSeek, Baidu and others and will continue to do so," he added. Ray Wang, principal analyst at Constellation Research, said the chip-to-model strategy is similar to that of Google, a company that is also developing AI chips and AI models like its open-source Gemma models. Huawei's announcement on Monday could also help with its international ambitions. Huawei, along with players like Zhipu AI, has been slowly making inroads into new overseas markets. In its announcement Monday, Huawei invited developers, corporate partners and researchers around the world to download and use its new open-source products in order to gather feedback and improve them. "Huawei's open-source strategy will resonate well in developing countries where enterprises are more price-sensitive as is the case with [Huawei's] other products," Einstein said. As part of its global strategy, the company has also been looking to bring its latest AI data center solutions to new countries.
CNBC
16-06-2025
- Business
- CNBC
Taiwan blacklists China's Huawei and SMIC, further aligning with U.S. trade policy
Taiwan has added China's Huawei and SMIC to its trade blacklist in a move that further aligns it with U.S. trade policy and comes amid growing tensions with Beijing. The International Trade Administration of Taiwan added Huawei and SMIC to its "Strategic High-Tech Commodities Entity List," including a host of their subsidiaries. Taiwan's current regulations require licenses from regulators before domestic firms can ship products to parties named on the entity list. Huawei and SMIC, two of China's leading semiconductor companies, are also on a trade blacklist in the United States and have been impacted by Washington's sweeping controls on advanced chips. Companies such as contract chipmaker Taiwan Semiconductor Manufacturing Co already follow U.S. export restrictions. However, the addition of Huawei and SMIC to the Taiwan blacklist is likely aimed at the reinforcement of this policy and a tightening of existing loopholes, Ray Wang, an independent semiconductor and tech analyst, told CNBC. He added that the new domestic export controls could also raise the punishment for any potential breaches in the future. TSMC had been embroiled in controversy in October last year when semiconductor research firm TechInsights found a TSMC-made chip in a Huawei AI training card. Following the discovery, the U.S. Commerce Department ordered TSMC to halt Chinese clients' access to chips used for AI services, according to a report from Reuters. TSMC could also reportedly face a $1 billion as penalty to settle a U.S. investigation into the matter. Huawei has been working to create viable alternatives to Nvidia's general processing units used for AI. However, experts say the company's advancement has been limited by export controls and a lack of scale and advancement in the domestic chip ecosystem. Still, Huawei had been able to acquire several million GPU dies from TSMC for its Ascend chip design by using previous loopholes before they were discovered, according to Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group. A die refers to a small piece of silicon material that serves as the foundation for building processors and contains the intricate circuitry and components necessary to perform computations. The Taiwanese government's crackdown on exports to SMIC and Huawei also comes amid tense geopolitical tensions with Mainland China, which regards the democratically governed island as its own territory to be reunited by force, if necessary. In April, the U.S. reaffirmed its commitment to support the existing status quo as China conducted large-scale military exercises off the coast of the island. In statements reported by state media on Sunday, China's top political adviser Wang Huning echoed Beijing's position, calling for the promotion of national reunification with Taiwan and for resolute opposition to Taiwan independence.
The Star
12-06-2025
- Business
- The Star
China's trump card against US
THE nation is counting on one crucial advantage as it seeks to grind out a deal to ease its high-stakes trade war with the United States – dominance in rare earths. Used in electric vehicles, hard drives, wind turbines and missiles, rare earth elements are essential to the modern economy and national defence. Here's a look at how rare earths have become a key sticking point in talks between the United States and China. Mining boom: 'The Middle East has oil. China has rare earths,' Deng Xiaoping, the late Chinese leader whose pro-market reforms set the country on its path to becoming an economic powerhouse, said in 1992. Since then, Beijing's heavy investment in state-owned mining firms and lax environmental regulations compared to other industry players have turned China into the world's top supplier. The country now accounts for 92% of global refined output, according to the International Energy Agency. But the flow of rare earths from China to manufacturers around the world has slowed after Beijing in early April began requiring domestic exporters to apply for a licence – widely seen as a response to US tariffs. Under the new requirements – which industry groups have said are complex and slow-moving – seven key elements and related magnets require Beijing's approval to be shipped to foreign buyers. Deep impact: Ensuring access to the vital elements has become a top priority for US officials in talks with Chinese counterparts, with the two sides meeting this week in London. 'The rare earth issue has clearly ... overpowered the other parts of the trade negotiations because of stoppages at plants in the United States,' said Paul Triolo, a technology expert at the Asia Society Policy Institute's Center for China Analysis, in an online seminar on Monday. That disruption, which forced US car giant Ford to temporarily halt production of its Explorer SUV, 'really got the attention of the White House', said Triolo. Officials from the two countries said on Tuesday that they had agreed on a 'framework' for moving forward on trade – with US Commerce Secretary Howard Lutnick expressing optimism that concerns over access to rare earths 'will be resolved' eventually. Rare earth advantage: The slowing of licence issuance has raised fears that more automakers will be forced to halt production while they await shipments. China's commerce ministry said over the weekend that as a 'responsible major country', it had approved a certain number of export applications, adding that it was willing to strengthen related dialogue with 'relevant countries'. But that bottleneck has highlighted Washington's reliance on Chinese rare earths for producing its defence equipment even as trade and geopolitical tensions deepen. An F-35 fighter jet contains over 400kg of rare earth elements, noted a recent analysis by Gracelin Baskaran and Meredith Schwartz of the Critical Minerals Security Program at the Center for Strategic and International Studies. 'Developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future,' they wrote. Playing catch up: The recent export control measures are not the first time China has leveraged its dominance of rare earths supply chains. After a 2010 maritime collision between a Chinese trawler and Japanese coast guard boats in disputed waters, Beijing briefly halted shipments of its rare earths to Tokyo. The episode spurred Japan to invest in alternative sources and improve stockpiling of the vital elements – with limited success. That is 'a good illustration of the difficulty of actually reducing dependence on China,' said Triolo, noting that in the 15 years since the incident, Japan has achieved only 'marginal gains'. The Pentagon is trying to catch up, with its 'mine-to-magnet' strategy aiming to ensure an all-domestic supply chain for the key components by 2027. The challenge facing Washington to compete with Beijing in rare earths is compounded by sheer luck: China sits on the world's largest reserves. 'Mineable concentrations are less common than for most other mineral commodities, making extraction more costly,' wrote Rico Luman and Ewa Manthey of ING in an analysis published on Tuesday. 'It is this complex and costly extraction and processing that make rare earths strategically significant,' they wrote. 'This gives China a strong negotiating position.' — AFP
CNBC
12-06-2025
- Business
- CNBC
China's racing to build its AI ecosystem as U.S. tech curbs bite. Here's how its supply chain stacks up
With the U.S. restricting China from buying advanced semiconductors used in artificial intelligence development, Beijing is placing hopes on domestic alternatives such as Huawei. The task has been made more challenging by the fact that U.S. curbs not only inhibit China's access to the world's most advanced chips, but also restrict availing technology vital for creating an AI chip ecosystem. Those constraints span the entire semiconductor value chain, ranging from design and manufacturing equipment used to produce AI chips to supporting elements such as memory chips. Beijing has mobilized tens of billions of dollars to try to fill those gaps, but while it has been able to "brute force" its way into some breakthroughs, it still has a long way to go, according to experts. "U.S. export controls on advanced Nvidia AI chips have incentivized China's industry to develop alternatives, while also making it more difficult for domestic firms to do so," said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group. Here's how China stacks up against the rest of the world in four key segments needed to build AI chips. Nvidia is regarded as the world's leading AI chip company, but it's important to understand that it doesn't actually manufacture the physical chips that are used for AI training and computing. Rather, the company designs AI chips, or more precisely, graphics processing units. Orders of the company's patented GPU designs are then sent to chip foundries — manufacturers that specialize in the mass production of other companies' semiconductor products. While American competitors such as AMD and Broadcom offer varying alternatives, GPU designs from Nvidia are widely recognized as the industry standard. The demand for Nvidia chips is so strong that Chinese customers have continued to buy any of the company's chips they can get their hands on. But Nvidia is grappling with Washington's tightening restrictions. The company revealed in April that additional curbs had prevented it from selling its H20 processor to Chinese clients. Nvidia's H20 was a less sophisticated version of its H100 processor, designed specifically to skirt previous export controls. Nevertheless, experts say, it was still more advanced than anything available domestically. But China hopes to change that. In response to restrictions, more Chinese semiconductor players have been entering the AI processor arena. They've included a wide array of upstarts, such as Enflame Technology and Biren Technology, seeking to soak up billions of dollars in GPU demand left by Nvidia. But no Chinese firm appears closer to providing a true alternative to Nvidia than Huawei's chip design arm, HiSilicon. Huawei's most advanced GPU in mass production is its Ascend 910B. The next-generation Ascend 910C was reportedly expected to begin mass shipments as early as May, though no updates have emerged. Dylan Patel, founder, CEO and chief analyst at SemiAnalysis, told CNBC that while the Ascend chips remain behind Nvidia, they show that Huawei has been making significant progress. "Compared to Nvidia's export-restricted chips, the performance gap between Huawei and the H20 is less than a full generation. Huawei is not far behind the products Nvidia is permitted to sell into China," Patel said. He added that the 910B was two years behind Nvidia as of last year, while the Ascend 910C is only a year behind. But while that suggests China's GPU design capabilities have made great strides, design is just one aspect that stands in the way of creating a competitive AI chip ecosystem. To manufacture its GPUs, Nvidia relies on TSMC, the world's largest contract chip foundry, which produces most of the world's advanced chips. TSMC complies with U.S. chip controls and is also barred from taking any chip orders from companies on the U.S. trade blacklist. Huawei was placed on the list in 2019. That has led to Chinese chip designers like Huawei to enlist local chip foundries, the largest of which is SMIC. SMIC is far behind TSMC — it's officially known to be able to produce 7-nanometer chips, requiring less advance tech than TSMC's 3-nanometer production. Smaller nanometer sizes lead to greater chip processing power and efficiency. There are signs that SMIC has made progress. The company is suspected to have been behind a 5-nanometer 5G chip for Huawei's Mate 60 Pro, which had rocked confidence in U.S. chip controls in 2023. The company, however, has a long way to go before it can mass-produce advanced GPUs in a cost-efficient manner. According to independent chip and technology analyst Ray Wang, SMIC's known operation capacity is dwarfed by TSMC's. "Huawei is a very good chip design company, but they are still without good domestic chipmakers," Wang said, noting that Huawei is reportedly working on its own fabrication capabilities. But the lack of key manufacturing equipment stands in the way of both companies. SMIC's ability to fulfill Huawei's GPU requirements is limited by the familiar problem of export controls, but in this case, from the Netherlands. While Netherlands may not have any prominent semiconductor designers or manufacturers, it's home to ASML, the world's leading supplier of advanced chipmaking equipment — machines that use light or electron beams to transfer complex patterns onto silicon wafers, forming the basis of microchips. In accordance with U.S. export controls, the country has agreed to block the sale of ASML's most advanced ultraviolet (EUV) lithography machines. The tools are critical to making advanced GPUs at scale and cost-effectively. EUV is the most significant barrier for Chinese advanced chip production, according to Jeff Koch, an analyst at SemiAnalysis. "They have most of the other tooling available, but lithography is limiting their ability to scale towards 3nm and below process nodes," he told CNBC. SMIC has found methods to work around lithography restrictions using ASML's less advanced deep ultraviolet lithography systems, which have seen comparatively fewer restrictions. Through this "brute forcing," producing chips at 7 nm is doable, but the yields are not good, and the strategy is likely reaching its limit, Koch said, adding that "at current yields it appears SMIC cannot produce enough domestic accelerators to meet demand." SiCarrier Technologies, a Chinese company working on lithography technology, has reportedly been linked to Huawei. But imitating existing lithography tools could take years, if not decades, to achieve, Koch said. Instead, China is likely to pursue other technologies and different lithography techniques to push innovation rather than imitation, he added. While GPUs are often identified as the most critical components in AI computing, they're far from the only ones. In order to operate AI training and computing, GPUs must work alongside memory chips, which are able to store data within a broader "chipset." In AI applications, a specific type of memory known as HBM has become the industry standard. South Korea's SK Hynix has taken the industry lead in HBM. Other companies in the field include Samsung and U.S.-based Micron. "High bandwidth memory at this stage of AI progression has become essential for training and running AI models," said analyst Wang. As with the Netherlands, South Korea is cooperating with U.S.-led chip restrictions and began complying with fresh curbs on the sale of certain HBM memory chips to China in December. In response, Chinese memory chip maker ChangXin Memory Technologies, or CXMT, in partnership with chip-packaging and testing company Tongfu Microelectronics, is in the early stages of producing HBM, according to a report by Reuters. According to Wang, CXMT is expected to be three to four years behind global leaders in HBM development, though it faces major roadblocks, including export controls on chipmaking equipment. SemiAnalysis estimated in April that CXMT remained a year away from ramping any reasonable volume. Chinese foundry Wuhan Xinxin Semiconductor Manufacturing is reportedly building a factory to produce HBM wafers. A report from SCMP said that Huawei Technologies had partnered with the firm in producing HBM chips, although the companies did not confirm the partnership. Huawei has leaned on HBM stockpiles from suppliers like Samsung for use in their Ascend 910C AI processor, SemiAnalysis said in an April report, noting that while the chip was designed domestically, it still relies on foreign products obtained prior to or despite restrictions. "Whether it be HBM from Samsung, wafers from TSMC, or equipment from America, Netherlands, and Japan, there is a big reliance on foreign industry," SemiAnalysis said.
The Star
11-06-2025
- Business
- The Star
Rare earths: China's trump card in trade war with US
File photo of a labourer working at a site of a rare earth metals mine at Nancheng county, Jiangxi province. - Reuters BEIJING: China is counting on one crucial advantage as it seeks to grind out a deal to ease its high-stakes trade war with the United States -- dominance in rare earths. Used in electric vehicles, hard drives, wind turbines and missiles, rare earth elements are essential to the modern economy and national defence. AFP takes a look at how rare earths have become a key sticking point in talks between the US and China. "The Middle East has oil. China has rare earths," Deng Xiaoping, the late Chinese leader whose pro-market reforms set the country on its path to becoming an economic powerhouse, said in 1992. Since then, Beijing's heavy investment in state-owned mining firms and lax environmental regulations compared to other industry players have turned China into the world's top supplier. The country now accounts for 92 per cent of global refined output, according to the International Energy Agency. But the flow of rare earths from China to manufacturers around the world has slowed after Beijing in early April began requiring domestic exporters to apply for a licence -- widely seen as a response to US tariffs. Under the new requirements -- which industry groups have said are complex and slow-moving -- seven key elements and related magnets require Beijing's approval to be shipped to foreign buyers. Ensuring access to the vital elements has become a top priority for US officials in talks with Chinese counterparts, with the two sides meeting this week in London. "The rare earth issue has clearly... overpowered the other parts of the trade negotiations because of stoppages at plants in the United States," said Paul Triolo, a technology expert at the Asia Society Policy Institute's Center for China Analysis, in an online seminar on Monday. That disruption, which forced US car giant Ford to temporarily halt production of its Explorer SUV, "really got the attention of the White House", said Triolo. Officials from the two countries said Tuesday that they had agreed on a "framework" for moving forward on trade -- with US Commerce Secretary Howard Lutnick expressing optimism that concerns over access to rare earths "will be resolved" eventually. The slowing of licence issuance has raised fears that more automakers will be forced to halt production while they await shipments. China's commerce ministry said over the weekend that as a "responsible major country" it had approved a certain number of export applications, adding that it was willing to strengthen related dialogue with "relevant countries". But that bottleneck has highlighted Washington's reliance on Chinese rare earths for producing its defence equipment even as trade and geopolitical tensions deepen. An F-35 fighter jet contains over 900 pounds (more than 400kg) of rare earth elements, noted a recent analysis by Gracelin Baskaran and Meredith Schwartz of the Critical Minerals Security Programme at the Center for Strategic and International Studies. "Developing mining and processing capabilities requires a long-term effort, meaning the United States will be on the back foot for the foreseeable future," they wrote. The recent export control measures are not the first time China has leveraged its dominance of rare earths supply chains. After a 2010 maritime collision between a Chinese trawler and Japanese coast guard boats in disputed waters, Beijing briefly halted shipments of its rare earths to Tokyo. The episode spurred Japan to invest in alternative sources and improve stockpiling of the vital elements -- with limited success. That is "a good illustration of the difficulty of actually reducing dependence on China", said Triolo, noting that in the 15 years since the incident, Japan has achieved only "marginal gains". The Pentagon is trying to catch up, with its "mine-to-magnet" strategy aiming to ensure an all-domestic supply chain for the key components by 2027. The challenge facing Washington to compete with Beijing in rare earths is compounded by sheer luck: China sits on the world's largest reserves. "Mineable concentrations are less common than for most other mineral commodities, making extraction more costly," wrote Rico Luman and Ewa Manthey of ING in an analysis published Tuesday. "It is this complex and costly extraction and processing that make rare earths strategically significant," they wrote. "This gives China a strong negotiating position." - AFP
