DeepSeek is said to be making a significant order of Huawei AI chips for a one-gigawatt data centre in Inner Mongolia, signaling increased adoption of domestic hardware solutions in China’s AI sector amid ongoing export controls affecting foreign suppliers.
- DeepSeek targets Huawei Ascend chips for a large Ulanqab data centre
- Data centre part of China's strategy to move AI computing westward
- Shift driven by export controls limiting Nvidia chip sales in China
What happened
According to Bloomberg sources familiar with the project, DeepSeek plans to place a substantial order of Huawei’s Ascend AI chips for a new data centre in Ulanqab, Inner Mongolia. While the exact size of the order, the model of chips, and whether a contract is finalized remain undisclosed, the data centre is expected to have roughly one gigawatt of capacity and could begin partial operations by late 2027 or early 2028. The data centre project has been reported since the summer but has not been publicly confirmed by DeepSeek.
This move coincides with China’s broader Eastern Data, Western Compute strategy that aims to relocate energy-intensive computing resources to western regions such as Inner Mongolia, which has attracted approximately $27 billion in AI computing projects. DeepSeek’s V4 AI model was optimized to run on Huawei’s Ascend 950 chip starting in April, and Chinese cloud providers have already placed orders for hundreds of thousands of these chips, indicating an ongoing trend toward domestic chip adoption.
Why it matters
DeepSeek’s reliance on Huawei Ascend chips highlights a significant shift in the Chinese AI ecosystem driven by export controls that prohibit Nvidia’s leading AI accelerators from entering China. This forces Chinese AI labs to deepen their commitment to domestic hardware, potentially decoupling their software and tooling from Nvidia’s CUDA ecosystem, which has historically been a major differentiator for Nvidia and a barrier to hardware competition.
The scale of the reported order signals Huawei’s growing capacity to produce AI chips at enormous volume and DeepSeek’s commitment to large-scale AI computing infrastructure. While DeepSeek is also reportedly developing its own inference chip with SMIC, Huawei’s hardware currently serves as a key domestic alternative for high-performance AI computing, underscoring China’s strategic drive for technological self-reliance in AI.
What to watch next
Observers should monitor whether DeepSeek finalizes the Huawei chip order and how large it ultimately is, as this will provide insight into Huawei’s manufacturing scale and DeepSeek’s infrastructure ambitions. The development timeline of the Ulanqab data centre and its operational milestones will also reveal China’s progress in relocating AI computing capacity westward per government objectives.
Additionally, how DeepSeek balances domestic chip use with its own chip development efforts will be critical to watch. Success with custom inference chips could reduce reliance on Huawei over time. Meanwhile, the evolution of China’s AI software ecosystem as it moves away from Nvidia’s CUDA platform will have implications for global AI technology competition and export policy impacts.