Demand for new AI chips from Huawei is rising fast, and the shift is starting to ripple through the global chip market. A Reuters report said China’s largest tech firms are moving quickly to secure Huawei’s latest processors after a key software release changed how these chips are used.
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Forget margin or options. Here's how the pros trade NVDACompanies such as ByteDance, Tencent Holdings (TCEHY), and Alibaba Group Holding (BABA) have reached out to Huawei about new orders. The demand jump followed the launch of DeepSeek’s V4 AI model, which runs on Huawei’s Ascend 950 chips.
According to Reuters, the surge “underscores how DeepSeek’s V4 release… has turbocharged demand for domestic Chinese AI hardware.” That link between software and chips is now driving buying decisions across China’s cloud and AI sectors.
At the same time, cloud providers rushed to deploy the model. Alibaba Cloud and Tencent Cloud both made V4 available on the day it launched, which helped expand usage and increase demand for more computing power.
Nvidia Faces a New Limit in China
This shift comes as Nvidia Corporation (NVDA) faces tighter limits in China. Its H20 chip was the most advanced product it could sell in the market before new rules blocked imports. While Huawei’s 950PR chip still trails Nvidia’s top H200 processor, it now exceeds the H20 in key tasks.
However, the H200 has not reached China due to ongoing trade issues between the U.S. and China. That delay has opened a window for Huawei to gain share in its home market.
DeepSeek’s move to tune its model for Huawei chips also marks a change in strategy. Instead of building around Nvidia systems, Chinese developers are now aligning software with local hardware. This could reduce reliance on U.S. suppliers over time.
For Nvidia, this does not change its global lead. The company still holds a strong position in high-end AI chips outside China. Yet China has been a large market, and limits there could weigh on long-term growth.
Advanced Micro Devices (AMD) and Intel Corporation (INTC) may face similar pressure. Both companies compete in data center chips, but neither has a clear path to sell top-tier AI hardware into China under the current rules.
Supply Limits Shape the Next Phase
Even with rising demand, supply remains tight. According to the report, Huawei plans to ship about 750,000 units of the 950PR this year. Full-scale output is expected in the second half of 2026.
Still, production faces limits due to U.S. controls on chip tools. These limits restrict China’s ability to scale advanced manufacturing, which may keep supply below demand for some time.
DeepSeek also pointed to this constraint. It said prices for its V4 model could fall once Huawei systems “ship at scale,” which suggests current costs reflect limited capacity.
In the broader view, this trend may reshape the global chip trade. The U.S. still leads in top-tier AI hardware, led by Nvidia. However, China is building a parallel system that links its own chips, cloud firms, and AI models.
Over time, that could split demand into two tracks. One track will rely on U.S. technology, while the other will grow around domestic systems in China.
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