Huawei Ships CloudMatrix 384 AI Chip System as Alternative to Nvidia Amid US Export Barriers

Team Finance Saathi

    30/Apr/2025

What's covered under the Article:

  1. Huawei’s CloudMatrix 384 AI chip system offers a competitive alternative to Nvidia's chips, boasting superior performance and capacity despite higher costs.

  2. The system is designed to rival Nvidia's NVL72, using Huawei’s Ascend 910C chips, but its reliance on many chips leads to increased power and manpower requirements.

  3. Huawei’s CloudMatrix 384 is gaining traction in China, driven by limited access to Nvidia's GPUs due to US export controls and a strong domestic demand for AI hardware.

Huawei has successfully rolled out its most advanced AI chip cluster, CloudMatrix 384, to Chinese domestic clients, marking a significant breakthrough in China's pursuit of AI hardware self-reliance. This new system, designed to compete with Nvidia’s chips, comes amid stringent US export controls aimed at restricting China’s access to Nvidia’s semiconductors, particularly its high-performance GPUs used in AI applications.

Huawei’s CloudMatrix 384 System: A Game-Changer in AI Hardware

The CloudMatrix 384 system is a powerful AI chip cluster that links 384 of Huawei’s Ascend 910C chips into a high-performance computing system. This system features a proprietary “super node” optical interconnect designed to enhance the overall performance of the system. While the Ascend 910C chips themselves may not match Nvidia’s GB200 in terms of standalone performance, the CloudMatrix 384 system’s scale and architecture allow it to compete with Nvidia's widely used NVL72 cluster, commonly used in data centers for AI training and processing tasks.

Huawei claims that CloudMatrix 384 outperforms Nvidia’s NVL72 by 67% in compute power and has over three times the memory capacity of Nvidia's offering, according to internal presentations reviewed by the Financial Times. This performance boost is attributed to Huawei’s extensive expertise in telecommunications infrastructure, particularly its ability to optimize data transmission within large chip networks.

Huawei’s Response to US Export Restrictions

The release of CloudMatrix 384 comes in response to the US government’s trade barriers that have severely limited China’s access to Nvidia’s AI chips. These export restrictions have left Chinese tech companies scrambling for alternatives, and Huawei’s new AI chip cluster has emerged as a viable solution. As a result, Huawei has already shipped more than 10 systems to large Chinese data centers, which previously relied on Nvidia’s chips but are now cut off due to US trade restrictions.

The growing demand for AI chips within China, driven by government backing and a robust domestic tech ecosystem, has allowed Huawei to capitalize on this opportunity. Despite not having access to Nvidia’s GPUs, Chinese tech companies are looking for alternatives to continue their AI developments, and CloudMatrix 384 has become a key player in this shift.

Strengths and Weaknesses of CloudMatrix 384

While the CloudMatrix 384 system offers impressive performance, it is not without its drawbacks. One of the main challenges is its reliance on a large number of chips, which leads to higher energy consumption and operational costs. Compared to Nvidia’s NVL72, which has a more efficient design, CloudMatrix 384 requires a significant amount of power, and the system’s overall operational cost is considerably higher. Additionally, the software ecosystem surrounding Huawei’s hardware is not as mature as Nvidia’s well-established CUDA platform, which provides optimizations for AI workloads.

Due to these power demands, manpower costs for maintaining the CloudMatrix 384 system are estimated to be three to five times higher than what is needed for Nvidia’s systems. Huawei will need to address these issues as it continues to expand its AI hardware offerings to remain competitive in this rapidly evolving market.

Strategic Move Amid Geopolitical Tensions

The launch of CloudMatrix 384 also represents Huawei’s strategic move to challenge Nvidia’s dominance in the AI hardware space, particularly within China. With the US export controls creating an opening, Huawei has quickly capitalized on this opportunity to establish itself as a leading supplier of AI infrastructure within the country. Moreover, Huawei has the advantage of a strong domestic demand and support from the Chinese government, which is keen on reducing the country’s reliance on foreign technology, particularly in critical sectors like AI.

The price of the CloudMatrix 384 system is around RMB 60 million ($8.2 million), which is significantly higher than the $3 million cost of Nvidia’s NVL72. However, the steep price is reflective of the system’s higher operational costs and the customization needed to meet the demands of the Chinese market.

Despite these challenges, Huawei’s entry into the AI chip cluster market is seen as an ambitious move that could disrupt the existing market dynamics, especially with Nvidia’s limited access to Chinese companies. Huawei’s ability to provide an alternative to Nvidia's hardware in this environment gives it a solid foundation to build its position as a major player in China’s AI hardware sector.

Conclusion: A Competitive Future for Huawei in AI Hardware

The launch of the CloudMatrix 384 system marks a turning point in China’s AI hardware development. By providing a competitive alternative to Nvidia’s dominant AI chips, Huawei is positioning itself as a key player in the rapidly growing AI infrastructure market. While challenges such as power consumption, costs, and a less mature software ecosystem exist, Huawei’s ability to navigate these issues will determine its success in taking on Nvidia’s AI hardware dominance in the coming years.

As US trade policies continue to shape the global semiconductor market, Huawei’s move into the AI chip market serves as a clear signal of China’s growing technological self-reliance and its commitment to domestic innovation in the face of global trade tensions.

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