Huawei just retasked a factory to prioritize AI over its bestselling phone

Reuters reports that Huawei will focus on increasing the manufacturing of its AI chip, the Ascend 910B, at the expense of production of its Mate 60 phones in at least one facility.

Huawei makes both its Ascend AI chip and the Kirin chip, which powers the Mate 60, in one facility. However, production in the plant has been low, people familiar with the matter told Reuters, so the company now plans to prioritize the AI chip. Demand for Ascend chips, which aid in training AI models, has been growing domestically. By delaying the production of chips for Mate 60, Huawei can focus on improving the number of usable and sellable chips from the facility. The Mate 60 helped Huawei beat Apple’s phone sales in the country in 2023, writes the South China Morning Post, which makes slowing its production an interesting bet on AI’s importance to the company.

Chinese AI companies have a hard time sourcing highly sought-after AI chips like Nvidia’s H100 after the United States imposed restrictions on chip exports. This has pushed Chinese AI developers to use domestic alternatives like Huawei’s Ascend 910B chip.

Chinese companies have been trying to plant their flag in the generative AI hype cycle but are at a slight developmental disadvantage to the US. Companies like Baidu have released large language models and chatbots to the public, but they have yet to find the scale of OpenAI’s ChatGPT or Google’s Bard. China was the first country to come out with AI policies and requires companies working on AI products to go through an approval process before releasing them to the public.