China’s semiconductor industry is rallying around DeepSeek’s V4 large language model, with a growing roster of domestic chipmakers racing to ensure compatibility as Washington tightens the screws on the country’s access to advanced AI technology.
A Wave of Domestic Chip Adoption
Since DeepSeek released its V4 preview on April 24, Chinese firms have moved swiftly to adapt the model to local hardware. Huawei was among the first, with V4 fully optimized for its Ascend 950PR chip platform. The company said its full lineup of AI processors — including the A2, A3, and 950 series — had completed compatibility testing, according to the South China Morning Post. Cambricon Technologies and Moore Threads Technology also stand to benefit from what analysts describe as a surge in demand for domestically produced high-performance chips.
Huawei reportedly plans to produce about 750,000 Ascend 950PR chips in 2026, with mass production having started in April and shipments expected in the second half of the year, according to Reuters. Deployment costs for inference on V4 are reported to be about one-tenth of comparable GPT-based services. China’s largest internet groups — Alibaba, ByteDance, and Tencent — have collectively ordered hundreds of thousands of Ascend 950 processors following the V4 release.
Engineering Breakthroughs and Strategic Implications
V4’s hybrid attention architecture enables a one-million-token context window while requiring only 27 percent of the inference compute and 10 percent of the KV cache compared to V3. The Council on Foreign Relations noted that the model’s optimization for Huawei’s Ascend chips rather than Nvidia’s was reportedly done at Beijing’s direction, though DeepSeek “appears to still be extraordinarily dependent on U.S. technology” and ultimately trained the model on Nvidia hardware.
Su Lingyao, an analyst at BOC International, said V4 “has lowered the threshold for using high-performance AI models” and that its compatibility with domestic chips “will accelerate the commercialisation of AI computing power in China”.
Washington Responds on Multiple Fronts
The US is countering on several fronts. In early April, Representative Michael Baumgartner introduced the MATCH Act in the House, a bipartisan bill that gives allied nations 150 days to match US restrictions on semiconductor equipment exports to Chinese chipmakers including Huawei, SMIC, Hua Hong, and YMTC. Senators Jim Risch and Pete Ricketts introduced a companion bill in the Senate.
Separately, the State Department issued a diplomatic cable on April 25 directing US embassies worldwide to raise concerns about “adversaries’ extraction and distillation of US AI models,” laying groundwork for possible follow-up actions against Chinese AI labs, according to Reuters. The White House Office of Science and Technology Policy characterized distillation operations as “deliberate, industrial-scale campaigns,” according to a memo reviewed by the BBC.
