Beijing-based Cambricon is set to triple production of AI chips in 2026, with plans to deliver half a million AI accelerators. Bloomberg's Peter Elstrom discusses the company and wider plans by China to boost production of advanced AI chips. He joins Caroline Hyde and Ed Ludlow on "Bloomberg Tech."

Shanghai

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

Rise of AI

China is intensifying efforts to develop its domestic AI chip industry in response to U.S. export controls that limit access to advanced chips from companies like NVIDIA. Major players such as Huawei and Canberra Con are increasing investment and production, with Canberra Con planning to triple its output in the coming year. Despite these efforts, Chinese manufacturers like SMIC remain technologically behind global leaders, producing chips at lower yields and higher costs.

Beijing has instructed local companies to prioritize domestic chips, even as current production lags behind international standards. Only about 20% of chips produced by SMIC are usable, compared to 80-90% yields from leading global manufacturers. Nevertheless, China is willing to absorb higher costs to advance its strategic goal of self-sufficiency in AI chip technology.

China bolsters support for domestic AI chipmakers

Canberra Con is another example of a domestic player with an AI accelerator product. It is reliant on SMIC China's domestic version of TSMC. And this is an interesting piece of reporting. Bring us the details but also technologically speaking the differences of where Canberra Con and SMIC are versus NVIDIA because the scale is completely different. Yeah this is exactly what Jensen Wang is talking about. This is exactly what he's concerned about within China that after the Biden administration first decided to cut off shipments of NVIDIA chips into that country the government and the companies there saw the market opportunity. They saw their own vulnerabilities and they decided to invest very very aggressively in their own production technologies for chips and also AI design. So Huawei is really the primary competitor that we have been talking about. They have quite a bit of momentum in building these AI chips. They've been used in a number of different places there. Canberra Con is really the second player. It's sort of like the AMD for that market. They're quite they're quite small at this point. They don't have the kind of half that while we does in particular but they are making a lot of progress. So what our sources have told us is that their plans are to triple their production of AI chips into next year. There'll be a pretty significant second to Huawei in supplying those chips. So to the broader question about what U.S. export controls do to this market as Jensen Wang is talking about it certainly has opened it up for domestic production. Chinese companies are being told by Beijing that they should buy domestic chips whenever possible. They've also turned down this idea that they're going to buy NVIDIA's H 20 chips. They don't think that those are good enough for the market. So as Mike Shepard was talking about earlier there may be a discussion about H 200. But there's no putting this genie back in the bottle. China has decided they are going to make their own chips domestically and they're making a lot of progress. They're making a lot of progress in designing them. But then they've got to get them spat out by smack. And it feels as though ultimately the production that what you're really garnering isn't very many. Yeah that's a that's a very good point. They are way way behind the global standards. There is some desperation here that if you have to produce at lower standards you will. But if you look at some of the details it's very very interesting. So SMIC is still producing these chips at seven nanometer. So well behind the three nanometer that we see from TSMC at this point. Also the yields. We've got some insights into the yields. Only about 20 percent of the chips they're making right now are actually usable. So that's only one out of five chips that they produce. They're actually able to use. You compare that with a TSMC which is up at 80 or 90 percent yields. Their economics are just totally different. But it's a sign of how badly Beijing wants to be able to catch up in this market that they're just going to eat those costs. They're going to eat four times the cost of what it would cost some other globally competitive manufacturers to make these chips because they feel like from a strategic standpoint they need to make this progress.

The New York Times has sued the U.S. Defence Department and Defence Secretary Pete Hegseth in an effort to force the Pentagon to abandon its restrictive new press policy. The Times alleges that the policy, rejected by at least 30 news organizations, violates its rights to free speech and due process.

New York

New York Times sues Pentagon, Hegseth over press restrictions

President Trump weighed in on Russian President Vladimir Putin's meeting with his envoy, Steve Witkoff, and his son-in-law, Jared Kushner. CBS News' Ramy Inocencio has more.

Moscow

Ukraine Invasion

Trump insists Putin wants to end Ukraine war after Witkoff's trip

Democrats have released never-before-seen images in the Jeffrey Epstein case. They were taken at his private island estate. It comes as the Trump administration faces a deadline to release the full Epstein case files in two weeks.

Newly released images and videos show Epstein's private island estate

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Caracas

Maduro accuses U.S. of pushing for regime change to get Venezuela’s oil

Australia starts enforcing a landmark ban requiring social media platforms to take down accounts belonging to under-16s

Canberra

Australia under-16s social media accounts to be taken down

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Brussels

EU agrees deal to ban Russian gas by end of 2027

President Trump pardoned Democratic Rep. Henry Cuellar of Texas and his wife on Wednesday. The couple was indicted in 2024 on more than a dozen federal charges. Cuellar has denied any wrongdoing.

Washington

Trump pardons Democratic Rep. Henry Cuellar and his wife

Sources say the Pentagon watchdog found Defense Secretary Pete Hegseth could have endangered American service members when he shared military information in a Signal group chat in March. Alex Plitsas, a former Pentagon official, joins "The Daily Report" to discuss.

Watchdog found Hegseth jeopardized sensitive military information

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Never-before-seen images of Jeffrey Epstein's island released

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Los Angeles

Doctor who sold Matthew Perry ketamine sentenced to 30 months in prison

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YouTube attacks Australia's underage social media ban

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Trump targets Somali immigrants amid reports of Minneapolis raids

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Russian tanker attacked off Turkey, Putin warns of retaliation

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Tennessee

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California

OpenAI declares 'code red' as Google threatens its AI lead

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Pokrovsk

Russia claims control of Pokrovsk

Major rescue and recovery efforts are underway across Southeast Asia after a series of severe storms battered the region displacing millions and killing more than 1,100 people.

Nuwara Eliya

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Tegucigalpa

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Blagnac

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Damascus

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New Orleans

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China bolsters support for domestic AI chipmakers

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Rise of AI