Did Huawei just outsmart US sanctions?

Huawei procured approximately two million Ascend 910B logic dies from TSMC through shell companies, circumventing US export controls designed to restrict access to advanced semiconductor technology, as documented in a report by the Center for Strategic and International Studies.

The report outlines how Huawei utilized intermediaries to acquire chiplets for its AI accelerators before TSMC identified the scheme and halted shipments. These chips are crucial for Huawei’s AI hardware strategy, which has evolved from the original Ascend 910—manufactured by TSMC using N7+ technology through 2020—to newer models like the domestically produced Ascend 910B and 910C. The latter two are fabricated at SMIC using first and second-generation 7 nm-class technologies.

Huawei sought TSMC-made dies due to difficulties in its domestic chip production processes. Reports indicate that the Ascend 910B and 910C suffer from low manufacturing yields, with about 25% of units failing during the advanced packaging phase that combines compute dies with high-bandwidth memory (HBM).

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Despite facing these challenges, the performance disparity with leading market solutions has narrowed significantly. The Ascend 910C is said to deliver approximately 60% of the performance of NVIDIA’s H100. Huawei has undertaken a strategic stockpiling effort focused on high-bandwidth memory components, reportedly acquiring a significant inventory of HBM between August and December 2024, prior to the implementation of new restrictions on advanced memory sales to China.

This situation highlights the difficulties in enforcing technology export controls, as third parties continue to access silicon intended for restricted companies. While Huawei persists in building AI infrastructure for internal projects and external clients, manufacturing limitations may restrict its ability to scale against competitors benefiting from advanced manufacturing capabilities. Future advancements in domestic EUV-based silicon manufacturing could potentially enable Huawei to improve its production capabilities and sidestep US-imposed restrictions.

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