Tech World Turns Upside Down: Huawei Reinforces Chip Dominance, Supermicro Secures Jumbo Saudi Contract
The world of technology never stops evolving, and recent headlines suggest some compelling plays of power. We are seeing Huawei strengthening its foothold in China's significant chip industry, while Supermicro headlines with a behemoth Saudi agreement. Let us find out in details.
Huawei's Growing Chip Empire in China
It's no secret Huawei has been on a meteoric ascent, going from smartphone behemoth to technology giant with its fingers in pretty much every technological pie. Now it seems Huawei is taking even greater control of its destiny by developing its own chip supply chain in China.
New reports show that Huawei is not only designing chips anymore but is actually manufacturing them. The company is said to be running around eleven different fabrication plants (fabs) across China, handling everything from foundry services to DRAM manufacturing. What's fascinating is how these facilities are reportedly named – often in ways that don't immediately link them back to Huawei, with many apparently having state backing. Think of facilities like Qingdao Si’En and several operations concentrated in Shenzhen under names like PST and PXW. It's a strategy that seems to be designed for clandestine but efficient operations.
The capabilities of these fabs are not to be sneezed at. At least five of these factories run by Huawei are reported to be capable of producing 7nm chips, which places them on the same level as China's leading semiconductor firm, SMIC. This massive scale of production is crucial to Huawei, which uses an enormous amount of chips in order to power its ambitions on anything from smartphones with its own SoCs to high-end AI accelerators. They're effectively building an end-to-end integrated supply chain, from design through manufacturing.
Through a huge R&D outlay and government support, Huawei's innate desire for expansion and innovation hardly seems to taper off. They're not only manufacturing hardware; they're building an entire ecosystem.
Supermicro's Multi-Billion Dollar Initiative with Saudi Arabia's DataVolt
Meanwhile, elsewhere in the world, Supermicro, one of the big players in GPU-as-a-Service and liquid-cooled AI infrastructure, closed a highly material deal. During a recent investment-trip visit to Saudi Arabia, Supermicro entered into a multi-year deal with DataVolt, one of the biggest Saudi data center companies.
That's no ordinary partnership, folks; we're talking about a $20 billion transaction. The idea is to combine gigawatt-scale renewable power and net-zero green hydrogen power with Supermicro's cutting-edge server technology. While the details of the deal remain unknown, Supermicro will be supplying DataVolt with rack-scale liquid cooling and high-density GPU platforms for a number of years.
Analysts are already crunching the numbers. Goldman Sachs estimates that if this is a 5-year contract, it would equate to roughly $4 billion of revenue annually for Supermicro and roughly $200 million of EBIT annually. Despite this potentially massive windfall, Goldman Sachs maintains a 'Sell' rating on Supermicro's stock (SMCI) with a $24 price target, as the stock is trading above.
On the other hand, though, is Raymond James analyst Simon Leopold, who is bullish, holding an 'Outperform' rating with a $41 price target. Leopold sees the deal as putting Supermicro in the spotlight and conceivably driving more estimate revisions, although he does have some reservations about the build-out timeline, presently envisioned for 2028.
This big deal is well-timed with Supermicro. The company just guided Q3 2025 revenue of $4.6 billion, which was consistent with guidance but lower than Wall Street estimates. Its Q4 guide also appeared to be a bit conservative. There are a few analysts, like Rosenblatt's Kevin Cassidy, who have the view that approximately $1 billion of revenue can be deferred as customers are testing NVIDIA's next-gen Blackwell GPU platforms, and such revenue is likely to appear over the course of the next few quarters.
Both Supermicro and Huawei are making radical moves that will determine their respective futures and have wider ramifications for the tech industry. We'll be monitoring closely how it plays out.
