After a prolonged period of corporate silence, Huawei’s CEO Ren Zhengfei has publicly acknowledged what industry insiders have long suspected: the company’s chips lag behind their U.S. counterparts by approximately one generation. However, his candid admission to the People’s Daily newspaper on the 10th of June revealed a sophisticated strategy that could reshape the global AI landscape even with technological constraints.

Huawei’s Unconventional Approach

Ren’s most conspicuous revelation wasn’t their acceptance of technological disadvantage but rather the company’s philosophical approach to getting over it.

“We use mathematics to supplement physics, non-Moore’s law to supplement Moore’s law and cluster computing to supplement single chips ,and the results can also achieve practical conditions,”

he explained. He described a strategy that focuses on architectural innovation over raw silicon performance.

This approach already has evident results. Huawei’s AI CloudMatrix 384 system was launched in April 2025 and it shows how the company is using cluster computing to get to competitive performance. The system links 384 Ascend 910C chips to create what analysts describe as capable of outperforming Nvidia’s GB200 NVL72 system on specific metrics despite individual chip limitations.

$25 Billion R&D Commitment

Huawei invests 180 billion yuan ($25.07 billion) in research annually with about a third of this going to theoretical research, while the rest was spent on product research and development. This is a substantial investment that relatively points towards a long-term strategy that extends beyond immediate commercial needs.

Ren’s emphasis on theoretical research is particularly significant.

“Without theory, there will be no breakthroughs, and we will not catch up with the United States,”

he stated, suggesting Huawei is building fundamental capabilities rather than merely copying existing technologies.

U.S. Response and Global Implications

The timing of Ren’s disclosure coincides with escalating U.S.-China tech tensions. The Trump administration’s recent guidance declaring that

“using Huawei Ascend chips anywhere in the world violates US export controls”

shows a huge escalation in semiconductor warfare with the Commerce Department warning that usage could trigger criminal penalties.

The U.S. Commerce Department specifically targeted three Huawei Ascend chips: the 910B, 910C, and 910D, conveying that they likely contain U.S. technology. As veteran export control lawyer Kevin Wolf explained,

“The guidance is not a new control, but rather a public confirmation of an interpretation that even the mere use anywhere by anyone of a Huawei-designed advanced computing [integrated circuit] would violate export control rules.”

This global prohibition goes beyond traditional export controls and effectively attempts to isolate Huawei’s AI ecosystem worldwide. The Commerce Department’s Bureau of Industry and Security noted that such chips are likely to have been “designed with certain US software or technology or produced with semiconductor manufacturing equipment that is the direct produce of certain US-origin software or technology, or both.”

The Market Reality

While Huawei’s cluster approach shows promise, it comes with trade-offs. The company has begun delivering AI chip “clusters” to clients in China that it claims outperform Nvidia’s comparable product “on crucial metrics such as total compute and memory.” However, this system relies on a large number of 910C chips, which individually fall short of Nvidia’s most advanced offering, but collectively deliver superior performance to a rival Nvidia cluster product.

Industry analysis suggests that Huawei’s CloudMatrix system gives you competitive performance via brute force scaling and uses approximately four times the power consumption of reminiscent Nvidia systems. This approach may be acceptable for certain applications but raises questions about long term sustainability and operational costs.

Huawei is targeting 700,000 Ascend chip shipments in 2025 and is “boosting production capacity by building its own advanced semiconductor production lines, as Chinese groups cut off from Nvidia’s products are increasing orders.” The Shenzhen based conglomerate’s focus on the domestic Chinese market (where Nvidia is fighting increasing restrictions) provides a plentiful customer base for these innovations.

Huawei’s Next-Generation Strategy

Ren’s mention of compound chips (semiconductors made from multiple elements rather than traditional silicon) hints at Huawei’s longer-term technological pathway. This approach could potentially bypass some of the manufacturing constraints imposed by export controls and still open new performance possibilities.

The company’s investment in compound semiconductor technology is key to global industry trends toward specialized architectures for AI workloads. This tells us Huawei may be positioning itself for future technological cycles rather than simply playing catch-up.

Strategic Humility or Calculated Messaging?

Ren’s assertion that

“The United States has exaggerated Huawei’s achievements. Huawei is not that great. We have to work hard to reach their evaluation”

represents either genuine humility or complex strategic communication. By downplaying Huawei’s capabilities, Ren may be trying to reduce geopolitical pressure while maintaining technological momentum.

This contrasts sharply with U.S. concerns about Huawei’s quick advancement. The Commerce Department’s guidance comes specifically because the US has become increasingly concerned at the speed at which Huawei has developed advanced chips and other AI hardware. Even Nvidia CEO Jensen Huang acknowledged Huawei as “one of the most formidable technology companies in the world,” suggesting the competitive threat is more substantial than Ren’s rhetoric might suggest.

Policy Contradictions and Strategic Complications

The Trump administration’s approach reveals interesting contradictions in U.S. policy. While warning against Huawei chip usage globally, the administration concurrently revoked the Biden-era AI Diffusion Rule on the same day, calling it “too bureaucratic.” This rule was designed to limit AI chip exports and prevent China from circumventing existing controls.

More tellingly, Trump’s visit to Saudi Arabia on the day of the Huawei guidance announcement coincided with deals for the kingdom’s new AI company, Humain, to build infrastructure using hundreds of thousands of Nvidia chips. Sources familiar with the situation noted that the scale of the proposed Gulf deals shocked many senior Trump administration officials, who were concerned about offshoring large-scale AI infrastructure and turning a blind eye towards Saudi Arabia and the United Arab Emirates’ collaborations with Beijing.

Implications For Global AI Competition

Huawei’s approach of using mathematical optimization and complex computing to get over individual chip limitations could make a new paradigm in AI hardware development. If all goes well, this strategy might evolve into evidence that technological leadership isn’t just determined by having the most advanced individual components but instead by system-level innovation and architectural creativity.

For the vaster technology industry, Huawei’s progress shows how export controls (while effective in limiting access to cutting-edge technology) may also speed up innovation in arduous environments. The company’s focus on fundamental research and alternative approaches could get us breakthroughs that benefit the entire industry.

The Road Ahead: Sustainability vs. Innovation

As U.S.-China technology competition intensifies, Huawei’s strategy represents a fascinating case study of innovation under constraint. The company’s willingness to acknowledge technological gaps while simultaneously demonstrating system-level competitiveness suggests a mature approach to long-term competition.

The success of Huawei’s cluster computing approach and compound chip investments will likely determine whether the company can maintain competitive relevance or become increasingly isolated from global technology leadership. The U.S. concern that

“China’s national champion will soon be selling AI processors in China and foreign markets that can compete with Nvidia and other US companies’ products”

suggests the stakes extend far beyond domestic market share.

With ongoing U.S.-China trade talks where tech restrictions are expected to be discussed, the geopolitical context will remain super important to Huawei’s technological route. The contradictions in U.S. policy (that simultaneously restrict Huawei while enabling massive chip deals with nations that collaborate with Beijing) highlight the super complex realities of global technology competition.

Ren’s rare public disclosure is a revolutionary moment in the global semiconductor competition because it reveals both the constraints and creative possibilities that are birthed when technological leaders face never-done-before challenges. Whether Huawei’s mathematical approach to supplementing physics will prove sustainable will remain the defining question for the future of AI hardware competition.