Huawei, the Chinese tech giant blacklisted by the U.S., announced a significant strategic move on Monday: the open-sourcing of two of its Artificial Intelligence (AI) models under its Pangu series, as well as some of its model reasoning technology. According to AI and tech experts, this initiative is expected to incentivize the use of other Huawei products, such as its Ascend AI chips. In recent years, the company has transformed from a competent private sector telecommunications firm into a “muscular technology juggernaut straddling the entire AI hardware and software stack,” as described by Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group. Huawei’s Monday announcement is touted by the company as “another key measure” for its “Ascend ecosystem strategy,” designed to accelerate AI adoption across “thousands of industries.” The Ascend ecosystem refers to AI products built around the company’s Ascend AI chip series, widely considered China’s leading competitor to products from American chip giant Nvidia, which is restricted from selling its advanced products to China.

These open-sourcing moves align with a broader strategy adopted by other Chinese AI players who continue to push an open-source development approach. Baidu also open-sourced its Ernie large language model (LLM) series on Monday. Tech experts told CNBC that Huawei’s latest announcements not only highlight its solidification as an open-source LLM player but also demonstrate how it is strengthening its position across the entire AI value chain as it works to overcome U.S.-led AI chip export restrictions. The goal is to build a robust AI ecosystem that will enable Huawei to continue expanding in international markets despite the sanctions.

The “Chip-to-Model” Strategy: Huawei’s Unique Advantage and Google Comparison

The availability of Pangu models as open-source allows developers and businesses to test and customize these models for their specific needs, serving as a significant incentive. “The move is expected to incentivize the use of other Huawei products,” said Lian Jye Su, chief analyst at Omdia. According to experts, the coupling of Huawei’s Pangu models with the company’s AI chips and related products gives Huawei a unique advantage. This integrated approach allows Huawei to optimize its AI solutions and applications, from the chip to the model, thereby offering more efficient performance and tailored solutions. While competitors like Baidu have LLMs with broad capabilities, Huawei has focused on developing specialized AI models for specific sectors such as government, finance, and manufacturing. “Huawei is not as strong as companies like DeepSeek and Baidu at the overall software level – but it doesn’t need to be,” said Marc Einstein, research director at Counterpoint Research. “Its objective is to ultimately use open source products to drive hardware sales, which is a completely different model from others. It also collaborates with DeepSeek, Baidu and others and will continue to do so,” he added.

This “chip-to-model” strategy, which integrates hardware and software development, is similar to Google’s approach, a company that also develops AI chips and AI models, such as its open-source Gemma models. Ray Wang, principal analyst at Constellation Research, noted that this strategy allows for tighter control over performance and the entire value chain. For Huawei, this approach is particularly crucial given the restrictions imposed by the U.S. government, which prevent it from accessing advanced chips from external sources. By developing a complete ecosystem, Huawei reduces its dependence on external suppliers and strengthens its technological resilience.

Global Ambitions and Focus on Developing Markets

Huawei’s announcement on Monday could also help fulfill its international ambitions. Huawei, along with players like Zhipu AI, has been slowly but steadily making inroads into new overseas markets. In its announcement, Huawei invited developers, corporate partners, and researchers worldwide to download and use its new open-source products, with the aim of gathering feedback and improving them. This approach, which encourages an open community and collaboration, is critical for the wide adoption of AI technologies.

“Huawei’s open-source strategy will resonate well in developing countries where enterprises are more price-sensitive as is the case with [Huawei’s] other products,” Einstein said, pointing to Huawei’s competitive advantage in markets where cost-effectiveness is a decisive factor. As part of a broader global strategy, the company is also looking to bring its latest AI data center solutions to new countries. These moves, combined with the open-sourcing initiative, reflect Huawei’s determination to establish dominance in the AI field by building complete ecosystems that integrate hardware, software, and support for a global developer community. Despite the sanctions, Huawei continues to demonstrate resilience and creativity in its path to becoming a significant global AI player.

Challenges and Risks: US Sanctions and Growing Competition

Despite Huawei’s strategic moves, the company still faces significant challenges, first and foremost the U.S. sanctions that restrict its access to advanced chips and technologies. These limitations force Huawei to invest massive resources in internal R&D and the development of a local supply chain, which can be expensive and slow. Additionally, competition in the global AI market is intensifying, with dominant players like Nvidia, Google, and OpenAI. Huawei’s ability to convince developers and customers outside of China to adopt its models, especially given security and geopolitical concerns, will be crucial for the success of its global open-source strategy. Nevertheless, by positioning itself as a comprehensive provider of AI solutions – from hardware to open-source models – Huawei is positioning itself as a key player in the battle for the future of artificial intelligence, while attempting to transform challenges into competitive advantages. Its success will be an important indicator of Chinese companies’ ability to thrive in a complex geopolitical environment and achieve technological self-sufficiency.