Bloomberg <\/p>\n
(Bloomberg) — Moore Threads Technology Co.\u2019s phenomenal debut this month \u2014 China\u2019s most successful coming-out party since 2019 \u2014 capped a year in which investors have grown increasingly excited about the prospects for the country\u2019s AI chip advancement. That euphoria may be misplaced.<\/p>\n
From Moore Threads to Cambricon Technologies Corp. and MetaX, the market is celebrating a coterie of once-unknown names that now harbor bold ambitions to take on Nvidia Corp. \u2014 at least at home. Major players like Alibaba Group Holding Ltd. and Baidu Inc. are making headway into the semiconductors that underpin AI development \u2014 one of Beijing\u2019s top priorities. Recently, Canadian research firm TechInsights took apart a Huawei Technologies Co. smartphone and revealed a processor made using more advanced technologies than Chinese chipmakers were thought capable of. China is even now preparing a package of as much as $70 billion to bankroll and support the sector, people familiar with the matter said.<\/p>\n
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The reality is grimmer. To advance to the cutting edge, many like Huawei are relying on Semiconductor Manufacturing International Corp. \u2014 a US-blacklisted firm that can\u2019t procure the requisite equipment to efficiently crank out advanced chips. Cambricon is making its best processors there at about a 20% yield \u2014 meaning four out of five silicon dies that roll off the assembly line are discarded as unusable. In its report, TechInsights warned that SMIC\u2019s achievements came with \u201ctradeoffs\u201d in cost.<\/p>\n
Even Moore Threads warned that investors may be getting over-exuberant. Its shares tanked as much as 19% Friday.<\/p>\n
\u201cThe key challenge remains access to advanced-node wafer capacity,\u201d said Karl Li, investment manager of China equities at Aberdeen Investments. \u201cThere remains a considerable supply deficit. We expect China to emphasize the expansion of advanced-node capacity to resolve this constraint, but we still anticipate a technological gap to the US to be maintained over the next couple of years.\u201d<\/p>\n
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Still, a casual observer wouldn\u2019t know that just from looking at the markets.<\/p>\n
In just a week, Moore Threads \u2014 a loss-making firm with a fraction of Huawei\u2019s output \u2014 more than quintupled to become one of China\u2019s most valuable pure hardware companies. AI accelerator designer MetaX Integrated Circuits Shanghai Co. drew thousands of times more bids for shares than it was offering in its IPO.<\/p>\n
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The mania reflects a vague bet that Beijing will pull out all the stops to prop up homegrown chipmakers in the age of AI, seeking to blunt American dominance in a field that could determine the destinies of nations. That necessarily involves developing Nvidia substitutes at home. US President Donald Trump\u2019s offer earlier this month to allow Nvidia to sell the relatively powerful H200 to China has so far met with silence on Beijing\u2019s part \u2014 for good reason.<\/p>\n
\u201cAccess to H200s could temporarily ease performance constraints, reducing urgency for some firms,\u201d Forrester Research analyst Charlie Dai said. \u201cHowever, China\u2019s strategic commitment to semiconductor independence remains unwavering. The effect will be substantial in the near term, but limited over time as policy, funding, and talent continue driving domestic innovation.\u201d<\/p>\n
In the longer run, Beijing\u2019s obsession with self-reliance will eventually prevail to a certain degree. The emergence of DeepSeek \u2014 which just this month released a highly capable model despite its lack of unfettered access to advanced Nvidia accelerators \u2014 \u00a0underscores how Huawei and its rivals are indeed climbing the technology ladder with semiconductors optimized for training smaller, open-sourced platforms.<\/p>\n
Hardware constraints may actually help drive innovation on the AI applications front.<\/p>\n
\u201cChina has the best open-source models in the world, despite not having the best silicon,\u201d said Felix Wang, tech sector head at Hedgeye Risk Management. \u201cChina chipmakers and AI players may have an advantage over the US since they\u2019re more adept at finding optimizations in those models.\u201d<\/p>\n
But the industry may have more immediate concerns. National resolve or no, the chokepoints facing China\u2019s chip companies remain firmly in place.<\/p>\n
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Chinese AI chip designers can\u2019t utilize the most cutting-edge fabrication processes at Taiwan Semiconductor Manufacturing Co. due to US curbs, putting them at an disadvantage against Nvidia and Advanced Micro Devices Inc.<\/p>\n
Read: How World Powers Are Vying for Chip Supremacy: QuickTake<\/p>\n
Memory is another major issue. Chinese companies have to rely on smuggled and previously stockpiled foreign parts, particularly high-end memory chips, for making AI accelerators. That\u2019s because China hasn\u2019t established a comprehensive ecosystem to provide all the critical parts it needs for emerging technologies. National champion Huawei\u2019s latest AI chip was found to contain an older generation of high-bandwidth memory chips from South Korean powerhouses SK Hynix Inc. and Samsung Electronics Co., while using dies from TSMC.<\/p>\n
Washington and its allies including Japan and the Netherlands are not supplying the country with the gear required to make the most sophisticated AI chips. Dutch firm ASML Holding NV so far has not sold a single extreme ultraviolet lithography system to China. That large, multimillion-dollar machine is seen as essential for manufacturing the fastest and most capable AI accelerators.<\/p>\n
Huawei is planning to make about 600,000 of its marquee 910C Ascend chips next year, while Cambricon is preparing to deliver about 500,000 AI accelerators in 2026. Both are regarded as major achievements within China.<\/p>\n
But for context, Nvidia alone was estimated to have sold a million H20 chips, a product it customized for China to meet export control requirements, in 2024.<\/p>\n
\u201cReplicating the chip-plus-software ecosystem takes more than 10 years as one has to deal with user inertia, lack of cutting-edge chip fabrication technologies and equipment import restrictions, among other issues,\u201d said Phelix Lee, an analyst at Morningstar.<\/p>\n
–With assistance from Jessica Sui and Maggie Eastland.<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"Bloomberg (Bloomberg) — Moore Threads Technology Co.\u2019s phenomenal debut this month \u2014 China\u2019s most successful coming-out party since…\n","protected":false},"author":2,"featured_media":181423,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[365,67410,7664,22013,363,364,4177,902,115265,607,109507,111,139,1042,69,145],"class_list":{"0":"post-181422","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-ai-accelerator","10":"tag-ai-applications","11":"tag-alibaba-group-holding-ltd","12":"tag-artificial-intelligence","13":"tag-artificialintelligence","14":"tag-beijing","15":"tag-bloomberg","16":"tag-cambricon-technologies-corp","17":"tag-china","18":"tag-moore-threads","19":"tag-new-zealand","20":"tag-newzealand","21":"tag-nvidia","22":"tag-nz","23":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/181422","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=181422"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/181422\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/181423"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=181422"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=181422"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=181422"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}