ISTANBUL

China is aiming to triple its Artificial Intelligence (AI) processor production by 2026, according to a report by the Financial Times.

One fabrication plant focused on manufacturing Huawei’s AI chips is expected to begin operations as early as the end of this year, with two additional facilities set to open next year, the daily reported, citing sources.

Once running at full capacity, the combined output of these three new plants could surpass the existing total production of comparable lines at Semiconductor Manufacturing International Corporation (SMIC), China’s top chipmaker, the sources also said.

SMIC also reportedly plans to double its capacity next year for making chips at 7 nanometers, the most advanced mass-produced type in China, for which Huawei stands as the largest customer now.

If the production of SMIC is doubled, other, smaller Chinese chip designers, such as Cambricon, MetaX, and Biren, will be able to get much larger allocations of SMIC’s capacity.

Chinese firms have been rushing to create next-generation AI chips compatible with a standard promoted by DeepSeek, which is China’s foremost AI start-up.

Backed by the Chinese hedge fund High-Flyer, DeepSeek launched its DeepSeek-R1 large language model on Jan. 20.

Semiconductors remain a contested issue between Beijing and Washington, DC.

“Domestic output won’t be an issue for long, especially with all the capacity coming online next year,” said an unnamed Chinese chipmaker executive in the report.

“If we succeed in developing and optimizing these Chinese chips to train and run Chinese models in a continuously evolving Chinese ecosystem, one day we will look back at this shift as an even more significant DeepSeek moment,” the chipmaker executive said, adding that the alignment could fill the gap for less advanced hardware capability.

DeepSeek released its V3.1 model last week, optimized for Chinese chips. The Chinese start-up's new model will now use a type of FP8 data format.