All this has also transformed Huawei's finances. In the six months to June, research and development expenses ate up more than a quarter of sales, equal to 121 billion yuan, roughly $18 billion, well above the 9% at Nvidia in its last fiscal year. As of end of last year, Huawei's long-term borrowings more than tripled to 219 billion yuan over the past 7 years, though Nvidia's have ballooned at a quicker pace.
Huawei bets on chip scaling and supernodes
Huawei and China may soon think struggle was worthwhile. The company says its so-called "Tau Scaling Law", unveiled in June, enables it to make high-performing chips without Western-made lithography equipment. Combined with special networking technology, the company is betting it can link clusters, or "supernodes", of about 100,000 processors to work together to train frontier AI models, which would erode the edge of Nvidia's individual chips.
The next big challenge will be sourcing enough components and machinery to manufacture these at scale to meet booming domestic demand. But for all the existential angst Huawei has endured, that seems like a nice problem to have.
From 5G leader to domestically focused innovator
In 2018, the Shenzhen-based company founded by former People's Liberation Army officer Ren Zhengfei was leading the global rollout of 5G mobile technology while its thriving smartphone division was second only to South Korea's Samsung Electronics 005930.KS by market share. That all changed after 2019 when Washington put it on a U.S. export blacklist. Without access to critical components and software, including Google's GOOGL.O Android mobile operating system, it sold its low-end handset division, retreated from some Western markets and doubled down on innovating.
Today, Huawei's smartphones and electronics run on its own processors and software, and it leans on domestic suppliers for as much as 60% of components by value. New ventures in energy and cars have become the group's fastest-growing divisions. Huawei and peers including Alibaba's 9988.HK T-Head accounted for 41% of China's AI chip market in 2025, up from virtually zero just a few years ago. Huawei also has the key endorsement from pioneering AI lab DeepSeek, which is working closely with the company to deploy its hardware.
Huawei's sales recover above pre-sanctions levels
What does not destroy Huawei, makes it stronger. Seven years after crippling U.S. restrictions on the privately held Chinese technology champion, its annual reported sales have recovered to 881 billion yuan in 2025, or roughly $131 billion, above pre-sanctions levels, helped by a huge spend on research and development. Its new AI chips, the Ascend 960DT and Ascend 960PR, unveiled in September and due to launch next year are the latest sign that it is ready to take on the $5.5 trillion Nvidia NVDA.O.
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