The U.S. government has announced new guidance that states that using Huawei Ascend chips anywhere in the world violates U.S. export controls.
This week, the Commerce Department not only rescinded the AI Diffusion Rule, but also issued guidance prohibiting usage of Huawei's Ascend accelerators. The move comes amidst anxiety from Nvidia that restricting the sale of American AI processors to other countries could lead to the rise of Chinese AI platforms filling the void.
Huawei's Ascend AI processors under fire
The formal reason for the U.S. DoC's banning of Ascend usage around the world is simple: these processors were allegedly developed and made using American technologies illegally. Therefore, any person or business involved in the usage of these components (including for research purposes) without prior authorization could be subject to legal consequences.
These may include criminal charges, administrative penalties, monetary fines, revocation of export rights, and incarceration. Given the current market situation, the new restriction is meant to show how far the U.S. government will go to protect American companies from their rivals in China.
"Such chips likely are either designed with certain U.S. software or technology or produced with semiconductor manufacturing equipment that is the direct product of certain U.S.-origin software or technology, or both," a statement by the U.S. Commerce Department's Bureau of Industry and Security reads.
"Additionally, such PRC 3A090 ICs may have been produced, purchased, or ordered by an entity listed on the Entity List or such entities were parties to the transaction. […] Because there is a high probability that a BIS authorization was required for the export, reexport, transfer (in-country), or export from abroad of any PRC 3A090 IC or related technology, unless such authorization was obtained, the design or production of the PRC 3A090 IC likely involved one or more violations of the [U.S. export regulations]."
There is an important thing to note about the Huawei processors in question. The Ascend 910B, Ascend 910C, and the upcoming Ascend 910D are banned, whereas the Ascend 910, which Huawei legally purchased from TSMC in 2019 – 2020 before ending up on the U.S. Entity List, can be used.
Such processors are already used beyond China. For example, G42, a UAE-based AI company, used to work closely with Huawei and relied on its hardware. However, G42 later partnered with U.S.-based Cerebras and cut off ties with Huawei.
Nvidia considers Huawei a rival, but there is a catch
Nvidia recognizes Huawei as a powerful opponent in the AI hardware sector as the company not only has rather powerful Ascend 910-series processors, but also highly-scalable rack-scale solutions (such as the CloudMatrix 384), something that its traditional rivals — such as AMD and Intel — lack. Furthermore, Huawei has its heterogeneous Compute Architecture for Neural Networks (CANN) platform that is meant to rival Nvidia's CUDA.
Nvidia chief executive Jensen Huang warned that if U.S. companies are pulled out of certain markets (including Chinese and European), other players and platforms — such as Huawei and CANN — will fill the gap. He suggested that whoever sets the standard in AI technology will define the future landscape of the industry.
However, it is extremely hard for blacklisted Huawei to replace Nvidia completely even in China as it is banned from using TSMC's advanced process technologies and has to use proxies to deceive the foundry and get chiplets for its Ascend-series processors.
Last year, the company managed to illegally get enough silicon from TSMC to build a million of its Ascend 910C accelerators, but it can barely get enough chips to replace Nvidia in China. Although Huawei produces many of its AI accelerators at SMIC in China, it does not look like this foundry can make enough sophisticated chips for the high-tech giant to a large degree because of the U.S. sanctions and inability to get enough advanced fab tools, which is why Huawei is investing billions in building domestic chipmaking equipment.
The new rule targeting Huawei (and its Ascend + CANN platform) came a day after a significant step toward easing the trade war between the U.S. and China. The two countries had announced a temporary suspension of certain import tariffs for a 90-day period, a move interpreted as progress in trade negotiations.
However, it is evident that the U.S. wants to ensure AI leadership no matter what. The severe action against Huawei is meant to show this, even despite the fact that Huawei's expansion beyond China is close to impossible unless it gets access to sufficient chipmaking capacity.
Huawei is not alone
Huawei is in a unique position. On the one hand, it can challenge Nvidia in terms of technologies. On the other hand, it cannot challenge Nvidia in terms of volume. However, Huawei is not alone.
There are also Biren Technology, InnoSilicon, and Moore Threads, companies that develop GPUs based on the architecture. This was originally developed by Imagination Technologies, and lead by highly experienced executives from AMD, Nvidia, and Huawei, who know how to build advanced processors.
For now, none of the three can compete against Nvidia's CUDA, or Huawei's CANN. Furthermore, Biren and Moore Threads are on the Entity List, so they do not have access to TSMC and other companies that use American Technologies. However, all three companies are developing, and eventually could threaten U.S. dominance in some segments of the AI market.
Now, the question is, will the U.S. government go on as far as restricting usage of all Chinese AI processors that are potentially developed and made using American technologies without authorization across the world to protect Nvidia and other American companies?
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