For years, the global chip industry believed the most advanced semiconductors could only be built using Western technology and ASML Holding’s (ASML) high-end lithography machines. Huawei now says it may have found another way to build chips that can match leading 1.4-nanometer processors by 2031.
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NVDS: built for a short position on NVDAThe Chinese tech giant recently introduced a new “LogicFolding” chip design that aims to deliver 1.4-nanometer-level performance by stacking circuits vertically instead of relying heavily on restricted Western chipmaking tools. If the approach works at scale, it could eventually create new competitive pressure for Nvidia (NVDA), Intel (INTC), AMD (AMD), Taiwan Semiconductor (TSM), ASML (ASML), and other global chipmakers.
Huawei’s New Push to Reduce Dependence on Western Technology
Instead of trying to shrink transistors using ASML’s extreme ultraviolet (EUV) machines, Huawei is focusing more on advanced chip packaging and vertical circuit stacking. The company said its new design improves computing efficiency by reducing the distance data needs to travel inside the chip.
Huawei plans to use the technology in future smartphone chips and next-generation AI processors. The company believes this approach could eventually help it produce chips with performance similar to next-generation 1.4-nanometer processors.
Should Nvidia, Intel, and Other Chipmakers Worry?
The short answer is yes, although Huawei still faces major technical hurdles. The bigger concern for Western chipmakers is that U.S. restrictions may have accelerated China’s push to build its own semiconductor ecosystem.
Nvidia CEO Jensen Huang recently acknowledged that the company has largely lost China’s AI chip market to Huawei after years of export restrictions. Huawei has moved aggressively into that gap with its Ascend AI chips and is becoming a stronger player in China’s AI infrastructure market.
If Huawei’s new chip architecture works at scale, companies like Nvidia, Intel, AMD, TSMC, and ASML could eventually face stronger competition from China, especially in AI chips and data center hardware.
Still, analysts believe the technology comes with serious engineering challenges. Stacking multiple layers of circuits creates heat issues, increases software complexity, and makes large-scale manufacturing more difficult. Huawei still needs to prove it can produce these chips reliably and efficiently at a commercial scale.
Which Chip Stocks Does Wall Street Prefer?
Using the TipRanks Stock Comparison Tool, Nvidia currently offers the highest analyst-implied upside among the major chip stocks shown above, with Wall Street price targets pointing to nearly 40% upside potential. Taiwan Semiconductor and ASML Holding also carry Strong Buy consensus ratings, with analysts seeing roughly 15% and 10% upside, respectively.
Meanwhile, Intel stands out as the only company in the group with a Hold consensus rating, with analysts currently expecting downside from recent levels.
