Huawei Technologies Co., Ltd. is set to initiate mass production of its latest AI chip, the Ascend 910C, in early 2025, despite facing significant hurdles due to U.S. trade restrictions.

What Happened: The Chinese telecom giant has already distributed samples of the Ascend 910C to various tech firms and begun accepting orders. The chip is designed to rival those from U.S. AI chipmaker Nvidia Corp. ( NVDA ) . Huawei remains a focal point in U.S.-China trade and security tensions, with Washington imposing restrictions over national security concerns, Reuters reported on Wednesday.

These U.S. curbs have impacted Huawei’s chip production, limiting its ability to achieve high yields necessary for commercial success. The Ascend 910C is produced by Semiconductor Manufacturing International Corp using its N+2 process. However, the absence of advanced lithography tools has restricted the chip’s yield to about 20%, a source revealed.

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Huawei’s current advanced processor, the 910B, also suffers from yield issues, leading to reduced production goals. U.S. restrictions have further complicated the situation by restricting access to critical lithography technology from Dutch manufacturer ASML. Despite these obstacles, Huawei plans to prioritize strategic government and corporate orders for its new chip.

Why It Matters: The U.S. has been tightening its grip on Huawei. In May, the Biden administration revoked export licenses for major American semiconductor firms like Intel Corp. ( INTC ) and Qualcomm Inc. ( QCOM ) , preventing them from supplying crucial chips to Huawei. This marked a significant escalation in the U.S. strategy to curb Huawei’s technological rise.

In October, U.S. lawmakers urged the Department of Commerce to take tougher action against Huawei’s alleged attempts to bypass sanctions through a secretive network of semiconductor facilities. This included leveraging companies like Pengxinxu and SwaySure Technology.

Most recently, in November, the U.S. reportedly asked Taiwan Semiconductor Manufacturing Co ( TSM ) to halt shipments of advanced chips used in AI applications to Chinese customers after discovering one of its chips in a Huawei AI processor.

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