China’s chip industry is moving to sharply expand production of artificial intelligence processors, with plans to triple output in 2026 as part of an effort to lessen reliance on Nvidia, according to a Financial Times report cited by Reuters via Yahoo Finance. The push includes new capacity linked to Huawei and a broader acceleration of domestic AI chip development that seeks performance on par with Nvidia’s China-special H20.
Huawei-linked plants and rising domestic capacity
The Financial Times report, as relayed by Reuters, says Huawei aims to start production at a plant dedicated to AI chips by year end, with two additional facilities slated to come online in 2026. While the plants are designed to specifically support Huawei, their ownership structure remains unclear. Huawei told the FT it does not have plans for its own plants.
Combined output from the three prospective facilities could exceed the current production capacity of similar lines at Semiconductor Manufacturing International Corporation (SMIC), described as China’s top chipmaker. SMIC, for which Huawei is the largest customer for 7-nanometre chips, plans to double its manufacturing capacity for those chips next year, the report added.
Huawei and SMIC did not immediately respond to Reuters requests for comment. According to Reuters, the latest moves build on earlier reporting in November that Huawei planned to begin mass-producing its most advanced AI chip in the first quarter of 2025 amid ongoing U.S. restrictions.
Beijing’s AI chip acceleration
Beijing is accelerating work on homegrown AI processors, with multiple companies developing chips that aim to rival the performance of Nvidia’s H20 variant offered for China. The government has expressed security concerns about that model, Reuters reported, underscoring the strategic impetus for domestic alternatives as the sector scales up.
SMIC’s role and timelines
SMIC’s planned capacity expansion for 7 nm chips positions it as a central player in the near-term supply picture, especially given Huawei’s status as a key customer. The potential addition of three Huawei-focused facilities, beginning production as early as this year and expanding through 2026, would further shift China’s AI chip landscape toward domestic sources.
As described by Reuters via Yahoo Finance, the combination of Huawei’s manufacturing plans, SMIC’s capacity growth, and broader industry efforts illustrates a concerted push to build an AI chip base that reduces exposure to Nvidia and aligns with policy goals to develop competitive local alternatives.
