Huawei’s Ambitions in AI Chip Development Lag Behind Revenue Growth Amidst China’s Tech Race
While Huawei has aggressively pursued its ambitions in developing proprietary artificial intelligence chips, the initial financial returns have yet to mirror the impressive double-digit revenue gains seen by its global competitors. This comes as Chinese technology firms collectively strive to bridge the significant gap with U.S. advancements in the crucial field of AI.
According to Huawei’s latest disclosures, revenue generated from its cloud computing services for external customers experienced a contraction of 3.5% in 2025, totaling 32.16 billion yuan (approximately $4.6 billion). This decline occurs despite Huawei holding the position of the second-largest cloud provider in mainland China.
Although the company’s overall cloud revenue, inclusive of internal customers, showed a modest increase of 4.8% to reach 72.8 billion yuan, its primary Information and Communications Technology (ICT) infrastructure segment reported a deceleration in revenue growth. This segment, which would encompass Huawei’s self-developed Ascend AI chip solutions designed to compete with industry leaders like Nvidia, saw its growth rate slow to 2.6%, a noticeable drop from the 4.9% recorded in 2024. For the entirety of 2025, Huawei’s total ICT revenue stood at 375.01 billion yuan.
This trend unfolds against a backdrop of stringent U.S. restrictions on Chinese companies’ access to the most advanced AI chips, particularly those from Nvidia. Concurrently, Beijing is intensifying its push for technological self-sufficiency across domestic industries.
Huawei’s dip in external cloud revenue contrasts sharply with the rapid ascent of ByteDance’s AI cloud business in China over recent months, though it’s important to note that this growth has occurred from a relatively smaller base. The parent company of TikTok is reportedly securing enhanced access to high-end Nvidia chips through a strategic partnership involving a planned data center in Malaysia. Furthermore, Reuters reported last week, citing sources, that ByteDance and Alibaba are planning to place orders for Huawei’s new AI chip. Neither ByteDance nor Alibaba provided immediate comment when approached by this publication.
Globally, U.S.-developed AI tools are widely regarded as the most sophisticated, though some Chinese AI models have demonstrated notable prowess in areas like video generation. However, access to all U.S. AI models remains restricted within mainland China.
Huawei’s subdued cloud growth figures emerge within a broader context of rapid global expansion in the cloud sector, juxtaposed with a period of slower economic growth within China. Worldwide, spending on cloud infrastructure services surged by an impressive 29% in the fourth quarter of 2025, marking the sixth consecutive quarter of growth exceeding 20%, according to research firm Omdia. The firm projects continued robust cloud growth of 27% for 2026.
In comparison, Alibaba, the dominant cloud computing player in mainland China, reported a significant 36% increase in segment revenue, reaching 43.28 billion yuan for 2025. Tencent also announced a 22% year-on-year increase in its business services revenue for 2025, fueled by growth in its domestic and international cloud service offerings.
Recent local promotional efforts in China for the AI tool OpenClaw have also seen considerable uptake, encouraging many users to download the agent and subscribe to associated cloud and AI model services. This digital engagement stands in contrast to China’s overall consumer spending, which has remained relatively subdued since the pandemic.
**Consumer Revenue Sees Slowdown**
In the smartphone market, Huawei reclaimed the top position in China by shipments last year, registering a modest 1.7% increase. However, the company ceded market share to Apple towards the latter part of 2025, following the release of the iPhone 17.
For the full fiscal year 2025, Huawei reported total revenue of 880.9 billion yuan, a 2% increase year-on-year, with net profit rising by approximately 8% to 68 billion yuan. The company significantly ramped up its investment in research and development, allocating a record 192.3 billion yuan, representing 21.8% of its total revenue.
“In 2025, Huawei’s overall performance remained steady,” stated Sabrina Meng, Huawei’s rotating chairwoman, in a concise statement that also conveyed her appreciation to customers, partners, and employees.
The company’s intelligent automotive solutions segment, which collaborates with numerous automakers on in-car software and driver-assist technologies, generated 45.02 billion yuan in revenue. While still substantial, this segment’s year-on-year growth decelerated to 72%, a notable slowdown from the extraordinary 474.4% surge experienced in 2024, reflecting the initial boom in the electric vehicle market.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/20277.html
