Huawei forced to slow smartphone production on growing demand for AI chips
An exclusive story by Reuters on Monday, citing unnamed sources familiar with the matter, reports that Chinese tech company, Huawei was forced to slow production of its premium Mate 60 phones after manufacturing constraints, paired with a growing demand, forced the company to prioritize artificial intelligence (AI) chips.
Huawei employs a single facility to manufacture both its Ascend AI chips and the Kirin chips, which are utilized in Apple (NASDAQ:AAPL)'s rival iPhone, according to three sources. Two of these sources note that production efficiency has been hindered by a low yield rate, indicating challenges in production quality.
Despite this setback, Huawei finds itself in a global competition for AI capabilities amid tensions in Sino-U.S. technology relations. Interestingly, Huawei has achieved the top position in Chinese smartphone sales for the first time in over three years, even as it faces challenges in the production of its chips.
The government is pushing for better computing power in China, leading to an increase in data center projects and demand for Huawei's Ascend 910B chips (widely considered the most competitive non-Nvidia AI chip available in China).
Huawei has chosen to focus on producing Ascend 910B chips over Kirin chips, slowing down the manufacturing of Mate 60 smartphones. The exact start date of this shift in production has not been disclosed.
According to the sources, Huawei is actively working to enhance its yield rate, which measures the number of functional chips per wafer. The hope is that the current production adjustment will be a temporary measure.
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