How Huawei’s dominance hangs over China’s AI chip IPO boom
China’s artificial intelligence chip sector has drawn heavy investor interest following a string of successful initial public offerings. But while those newly listed firms have led market gains, analysts say they are not leading China’s effort to reduce reliance on Nvidia. Instead, most analysts point to tech giant Huawei and its secretive chip unit, HiSilicon, as standing out among domestic competition, not only in technological advancement, but also in scale and its broader supply chain. Huawei , however, is not expected to go public. The company, best known for its smartphones and telecommunications business, has long maintained its intention to remain privately held, unlike many smaller chipmakers that have recently listed shares. Huawei did not respond to a request for comment from CNBC. That stance has limited options for mainland investors seeking exposure to China’s push to build a domestic alternative to Nvidia, currently the world’s most valuable company by market capitalization. Instead, investors have turned to smaller firms such as Biren Technology , MetaX , Moore Threads and Shanghai Iluvatar CoreX Semiconductor , all of which were listed recently. Moore Threads, a graphics processing unit developer founded in 2020, raised over $1.1 billion in its public listing on Dec. 5 . MetaX, which also develops GPUs, followed on Dec. 17, raising nearly $600 million . Chinese tech giant Baidu recently also announced plans to spin off its AI chip subsidiary, Kunlunxin , and list it in Hong Kong. Huawei is still likely to remain ahead of other Nvidia alternatives in China’s AI processor and GPU market… The reason is not just any single chip, but the stack. Principal analyst at Counterpoint Wei Sun Analysts say that despite those firms’ strong market performance, Huawei continues to dominate China’s AI processor market in terms of market share and breadth of offerings. In a report last month, analysts at Bernstein estimated that Huawei and Nvidia were neck and neck in China, with each accounting for about 40% of processor sales by dollar value. Bernstein projected Nvidia’s share would shrink to 8% under export restrictions, while Huawei’s share could rise to a dominant position at 50%, subject to policy changes. Cambricon was expected to hold about 9% of the market, with smaller firms like Hygon and MetaX trailing further behind. Analysts say the market is due for consolidation. “Semiconductor companies tend to consolidate with bigger players in order to invest in higher research and development,” said Qingyuan Lin, a senior analyst covering China semiconductors at Bernstein. Full stack Huawei has expanded its Ascend series of AI chips in recent years and plans to launch its next-generation Ascend 950 in 2026. Though these chips remain less powerful than their cutting-edge counterparts from Nvidia on a one-to-one performance basis, analysts said other innovations have set the Shenzhen-based firm apart in China. “Huawei is still likely to remain ahead of other Nvidia alternatives in China’s AI processor and GPU market,” said Wei Sun, a principal analyst at Counterpoint. “The reason is not just any single chip, but the stack… That matters more than headline specs.” The “stack” refers to multiple layers of the AI computing supply chain, spanning chip design, data center construction and software development. Last year, Huawei released its “AI CloudMatrix 384” system, which links large numbers of its cutting-edge Ascend chips to maximize performance . Analysts found that the cluster outperformed Nvidia’s leading system at the time on some metrics. Besides AI infrastructure, Huawei is also developing its CANN software layer to compete with Nvidia’s CUDA, putting them in direct competition across multiple layers of the AI ecosystem. Sun said that these factors have helped give Huawei a clear lead, though it does not mean the firm is unchallenged. Other technology giants in China, including Baidu , have been pursuing similar full-stack strategies. Production constraints Many newly listed Chinese AI chip firms, such as Moore Threads, are designers rather than manufacturers, meaning they rely on external foundries to produce chips. Nvidia, for example, depends on Taiwan Semiconductor Manufacturing Co . For Chinese chip designers, the closest thing to TSMC is Semiconductor Manufacturing International Corp., or SMIC. Analysts said SMIC’s limited production capacity has constrained output, with Huawei so far receiving priority access. “The situation at SMIC, where Huawei is being prioritized, probably under some direction from industrial planning authorities, leaves little capacity for the other leading GPU makers such as Biren, MetaX, Enflame, Illuvatar, Sophgo, and others,” said Paul Triolo, Partner and Senior VP for China at DGA Group. “Once some of the new companies burn through IPO revenue, there could be a reckoning if they can’t get sufficient production at SMIC and the market uptake for their product is slow.” Staying private Despite Huawei’s dominance in China’s AI chip sector, analysts do not expect the company to go public any time soon. But that’s not due to a lack of investor interest. “Huawei, as a listed company, would be getting a ton of investor interest, given its broad product line, significant lead in AI hardware and software development,” said DGA Group’s Triolo. However, Huawei founder Ren Zhengfei has long preferred to retain internal control over all aspects of the business rather than answer to shareholders, Counterpoint’s Sun noted. Analysts said Huawei has less need to raise capital than smaller competitors, given the profitability of its other businesses. The compan has also benefited from Beijing’s backing of the domestic semiconductor industry. Ren reportedly wrote in a 2021 letter to employees that Huawei could “gradually enter the market in the future.” Huawei’s operating profit margin fell to 9.2% in 2024 , or $10.9 billion, from 14.8% in 2023 , or $14.7 billion. “In a post-Ren era, it is not inconceivable that the company considers listing,” Triolo added. “But so far there has been no problem with revenue and funding for R & D, given the success of Huawei’s telecommunications and smartphone business.”
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