China’s Huawei plans to start mass-producing its most advanced artificial intelligence chip in the first quarter of 2025, even as it struggles to make enough chips due to U.S. restrictions, said two people familiar with the matter.

The telecoms conglomerate has sent samples of the Ascend 910C – its newest chip, meant to rival those made by U.S. AI chipmaker Nvidia – to some technology firms and started taking orders. Huawei is at the heart of U.S.-China friction over trade and security. Washington has imposed a series of curbs on Huawei and other Chinese companies, arguing that their technological progress poses a national security risk to the U.S. Beijing, which is trying to make the world’s second-biggest economy self-sufficient in advanced semiconductors, denies such claims.

The restrictions have hampered Huawei’s ability to get the yield – the proportion of chips that come off the manufacturing line fully functional – of its advanced AI chips high enough for them to be commercially viable.

The 910C is being made by top Chinese contract chipmaker Semiconductor Manufacturing International Corp (SMIC) on its N+2 process, but a lack of advanced lithography equipment has limited the chip’s yield to around 20%, said one source who was briefed on the results.

Advanced chips need yields of more than 70% to be commercially viable.

Even Huawei’s current most advanced processor, the SMIC-made 910B, has a yield of only around 50%, forcing Huawei to slash production targets and delay filling orders for that chip, the sources said.

Huawei and SMIC did not respond to requests for comment on Thursday.

US restrictions bite

TikTok’s Chinese parent, ByteDance, ordered more than 100,000 Ascend 910B chips this year but had received fewer than 30,000 as of July, a pace too slow meet the company’s needs. Other Chinese technology companies that have ordered from Huawei have complained of similar problems, sources have said.