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

Regardless of being crushed down by years of U.S. commerce restrictions, China’s telecom big Huawei has quietly emerged as one of many nation’s fiercest rivals throughout the complete AI panorama.  

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

“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,” stated Paul Triolo, companion and senior vp for China at advisory agency DGA-Albright Stonebridge Group.

This enlargement has seen the corporate become involved in every thing from good vehicles and working techniques to the applied sciences wanted for the AI growth, comparable to superior semiconductors, knowledge facilities, chips and enormous language fashions. 

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

This 12 months, Nvidia CEO Jensen Huang has grow to be more and more vocal in calling Huawei “one of the crucial formidable expertise firms on the planet.” He has additionally warned that Huawei will exchange Nvidia in China if Washington continues to limit U.S. chip corporations’ exports to the Asian nation.

Nvidia surpassed $4 trillion in market capitalization final week to grow to be the world’s most precious firm. Its cutting-edge processors and a associated “CUDA” computing system stay the {industry} customary 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 properly. Whereas difficult American AI stalwarts like Nvidia is a tall order, the corporate’s historical past exhibits 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 bold 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 comparable to Africa, the Center East, Russia and South America, earlier than ultimately increasing to locations like Europe.

By 2019, Huawei can be well-positioned to capitalize on the world 5G rollout, changing into a frontrunner 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 way of its chip design subsidiary, HiSilicon. 

However Huawei’s success additionally attracted growing scrutiny from governments exterior China, significantly the U.S., which has steadily accused Huawei’s expertise of posing a nationwide safety menace. 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 firms from doing enterprise with it. 

Because the influence 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 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 minimize 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 technique to construct a “full-stack, all-scenario AI portfolio” and to grow 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 develop and broad superior chip restrictions had been positioned on China, Huawei was an apparent option to grow 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 all the time resisted,” Triolo stated. On this approach, the restrictions additionally grew to become “the steroids” for Huawei’s AI {hardware} and software program stack.

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

The 5G chip got here as a shock to many within the U.S., who did not count on 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 stated 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 way in which. 

To fill the void left by Nvidia, Huawei “has been making large strides in replicating the efficiency of high-end GPUs utilizing mixtures of decrease chips,” stated Jeffrey Towson, managing companion 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 stated 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 stated 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. 

“Profitable the AI race is not nearly sooner chips. It additionally contains delivering the instruments builders have to construct and deploy large-scale fashions,” Forrester’s report stated, although authors famous that Huawei’s merchandise are nonetheless not built-in sufficient with different generally used instruments for builders to change over rapidly from Nvidia.

Whereas Huawei’s purpose 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 characterize 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 purposes. These completely different AI enterprise avenues additionally leverage different areas of the corporate’s huge expertise empire. 

The truth is, the corporate’s “ICT Infrastructure” enterprise — which incorporates 5.5G mobile community deployment and AI techniques for industrial use — grew to become 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 Net Providers and Oracle. 

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

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 help 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 12 months, the corporate stated final month. 

Rolling out such AI purposes usually includes having Huawei tech workers working for months on the challenge website, even when it is in a distant coal mine, Jack Chen, vp of the advertising and marketing division for Huawei’s oil, fuel and mining enterprise unit, which offers digital and clever options to remodel these industries, informed CNBC.

That analysis enabled the corporate in Might to deploy extra 100 electric-powered vans that may autonomously transport grime 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 stated.

Huawei has additionally open-sourced the Pangu fashions, in a transfer it stated 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 stated he anticipated Huawei to push Ascend in nations a part of China’s Belt and Street Initiative — an funding and growth challenge aimed toward rising markets. 

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