China Telecom Unveils Nation-First AI Models: MoE Architecture Meets Huawei Chips in Tech Power Play

China just threw down the gauntlet in the AI arms race—and they're using homegrown hardware to do it.

The Blueprint: Mix, Match, and Scale

Forget monolithic models. The new system leverages a Mixture of Experts architecture—a modular approach where specialized sub-models, or 'experts,' handle different tasks. Need image recognition? Route it to the vision expert. Complex language parsing? Another expert takes the wheel. This cuts computational waste and lets the system scale efficiently without retraining a giant neural net from scratch.

The Engine Room: Silicon Sovereignty

Powering this isn't an Nvidia GPU. It's Huawei's Ascend chips—a clear signal that China's tech decoupling is moving from policy to practice. The move bypasses Western semiconductor dependencies, building AI infrastructure on a fully domestic stack. It's a technical achievement, sure, but also a geopolitical chess move.

Why This Cuts Through the Noise

Most AI announcements are vaporware wrapped in hype. This one matters because it links strategic architecture with strategic hardware. MoE provides the agile, efficient framework; Huawei's chips provide the sovereign muscle. Together, they aim to create AI that's both powerful and politically palatable for Beijing's goals.

The finance crowd will call it 'vertical integration' and nod sagely—right before checking if their Nvidia stock is still a buy. The real bet isn't on a single model; it's on an entire, closed-loop tech ecosystem deciding it doesn't need permission to innovate.

China Telecom’s model lags behind OpenAI’s  GPT-OSS-120B

MoE architecture distributes tasks to multiple specialized submodels, or “experts.” Therefore, AI models developed with it can scale up capacity without significant increases in computational overhead. MoE was popularized by DeepSeek’s V3 model, released in December 2024, and has since become the norm for leading-edge Chinese AI models.

MoE models, however, were considered more technically demanding to train and run. China Telecom’s self-reported performance scores for its TeleChat3 models showed that they lagged behind those of OpenAI’s GPT-OSS-120B, released in August, on several benchmarks.

Last week, Tsinghua University spin said its new image-generation model was trained on Huawei chips, making it the first open-source model developed on an entirely domestic training stack to achieve industry-leading scores in image generation.

Beijing-based Zhipu AI was blacklisted by Washington last January. The US has placed several Chinese technology companies, including Huawei and iFlytek, on export-control blacklists. This effectively bars them from receiving US-origin chips, semiconductor tools, and other advanced technology.

Ant Group researchers, a fintech affiliate of Alibaba Group Holding, also said they successfully trained a 300-billion-parameter MoE model “without premium GPUs”. However, they did not specify whether they had exclusively used domestically designed chips.

Meanwhile, as reported by Cryptopolitan, a Nasdaq-style index of local Chinese tech stocks has jumped nearly 13% just this month. A second gauge tracking Hong Kong-listed Chinese tech firms is up 6%, and both are leaving the Nasdaq 100 behind.

Nvidia stock tanks as Beijing declares self-reliance

Nvidia said that its advanced GPUs and machine-learning frameworks were the best tools in the world for training large-scale MoE models. However, Beijing has made self-reliance across the entire AI stack a key priority for the country in the next five years due to US trade restrictions that block Chinese firms’ access to advanced US chips.

The US government recently gave the go-ahead for Nvidia to sell the H200, the firm’s second-most-powerful chip, to China. However, China moved to block shipments of advanced chips. Cryptopolitan reported that Beijing could be considering restrictions to advance local chip development or strengthen its negotiating position with the US.

As a result, suppliers paused production of H200 components after the block. Nvidia had expected more than 1 million orders from Chinese customers, with suppliers gearing up for March deliveries, but customs officials reportedly refused entry for the chips.

Nvidia shares have since slid about 3% after reports. According to analysts, Nvidia faces a clear risk. If China continues blocking H200 shipments, the stock could break a key near-term support. Should approvals ease, the boost could come fast, but policy uncertainty swings both ways. 

On the other hand, other chipmakers showed mixed moves as AMD climbed 1.7%, Intel fell 2.8%, while the S&P 500 ETF SPY dipped roughly 0.1%. Meanwhile, market watchers are looking out for NVDA’s upcoming February 25 quarterly earnings and any fresh details on its China export situation.

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