The geopolitical tension between the United States and China continues to profoundly impact the global technology industry, with Huawei Technologies at its core. Since 2019, the Chinese company has been subject to stringent U.S. export controls aimed at restricting its access to advanced chips and essential manufacturing equipment. Despite these challenges, recent statements by Huawei CEO Ren Zhengfei have generated significant interest, hinting at a new strategic approach by the company to tackle these hurdles. In an interview with the People’s Daily on Tuesday, June 10, 2025, Zhengfei conceded that Huawei’s chips are “one generation behind” their U.S. counterparts but emphasized that the company is finding creative ways to improve performance, including through cluster computing.

Strategic Investment in Research and Development: Bridging the Technology Gap?

One of the key points that emerged from Huawei CEO’s remarks is the company’s substantial investment in research and development. According to reports, Huawei invests approximately 180 billion yuan (about $25.07 billion) in R&D annually. One-third of this sum is allocated to theoretical research, while the remainder is dedicated to product R&D. This investment reflects the company’s deep belief in the power of innovation to drive breakthroughs, even when facing external limitations. Zhengfei explicitly stated that “without theory, there will be no breakthroughs, and we will not catch up with the United States.” This figure underscores the strategic importance of basic research for the company, as a critical component in securing its technological and competitive future. The emphasis on compound chips, made from multiple elements, points to an additional development direction where Huawei sees potential for performance improvement.

Moore’s Law Hurdles and Huawei’s Innovative Solutions

Zhengfei’s admission that “our single chip is still behind the U.S. by a generation” presents a complex picture of Huawei’s technological standing. However, he clarified that the company is not deterred by the challenge. Huawei is turning to innovative approaches to overcome these limitations. According to him, the company uses “mathematics to supplement physics, non-Moore’s law to supplement Moore’s law, and cluster computing to supplement single chips.” The term “Moore’s Law” refers to the pace of chip advancement, suggesting that the number of transistors on a chip doubles roughly every two years. It appears that Huawei acknowledges its current physical and technological limitations in producing chips with high precision and performance, and is seeking alternative ways to achieve similar objectives.

Cluster computing, where a large number of computers work together as a single unit, is a prime example of this strategy. By connecting many less advanced chips, it’s possible to create a system with an overall processing power equivalent to or even exceeding that of more powerful single chips. This approach allows Huawei to maximize the potential of its existing technology and reduce its reliance on access to the very latest chips that are subject to U.S. export controls. Zhengfei stressed that “the results can also achieve practical conditions. Software is not a bottleneck for us,” reinforcing the understanding that Huawei is focusing on optimizing both software and hardware solutions to overcome hardware limitations.

Competition in the AI Chip Market: Huawei Versus Nvidia

Huawei’s focus on Artificial Intelligence (AI) is particularly evident in its Ascend series of AI chips, which directly compete with offerings from Nvidia, the global leader in this field. The U.S. Commerce Department recently stated that using Ascend chips would violate export controls. Although Nvidia’s AI chips are generally considered more powerful, the restrictions imposed on Nvidia from selling its most sophisticated chips to China have created an opening for Huawei to gain significant market share.

A notable example is Huawei’s launch of “AI CloudMatrix 384” in April, a system that links 384 Ascend 910C chips in a cluster. This system, according to analysts, is capable of outperforming Nvidia’s GB200 NVL72 system on some metrics. Dylan Patel, founder of semiconductor research group SemiAnalysis, even noted in an article that this meant Huawei and China now have AI system capabilities that can beat Nvidia’s. This is a significant indicator of Huawei’s ability, despite being a generation behind in individual chips, to present innovative and competitive systemic solutions.

Towards an Independent Future?

Ren Zhengfei’s statements offer a rare glimpse into Huawei’s advanced chipmaking efforts, which have become a central point of friction in U.S.-China relations. While Huawei presents a strong front, it’s important to remember that it is just one of many Chinese chipmakers. Zhengfei himself pointed out that “the United States has exaggerated Huawei’s achievements. Huawei is not that great. We have to work hard to reach their evaluation.”

Huawei’s efforts to achieve advanced chip manufacturing capabilities independently, despite sanctions, reflect a broader trend in China to reduce its dependency on foreign technology. The recent developments by Huawei, with an emphasis on cluster computing and the development of compound chips, highlight the company’s ability to innovate and find workaround solutions to existing limitations. The future will show whether this strategy will enable Huawei not only to survive but also to thrive in today’s complex geopolitical and technological environment.