DeepSeek plans large Huawei chip order for new Inner Mongolia data centre

DeepSeek is preparing a large order of Huawei AI chips for a new data centre, according to Bloomberg. Neither the size of the order nor the chip model has been disclosed, and DeepSeek has not confirmed the plan.

The data centre has been reported since the summer. Bloomberg described a site of roughly one gigawatt in Ulanqab, Inner Mongolia, which could begin partial operations in late 2027 or early 2028. The reporting is based on people familiar with the project rather than information from DeepSeek itself.

Ulanqab is part of a broader Chinese strategy. The Eastern Data, Western Compute programme is moving energy-intensive computing infrastructure towards western regions where electricity is cheaper, and Inner Mongolia has signed around $27bn in AI computing projects as part of that push.

The choice of chips is the more significant part of the story. Nvidia’s most capable AI accelerators cannot legally be sold in China, leaving Huawei’s Ascend family as one of the main domestic options for a Chinese AI lab building computing capacity at this scale.

DeepSeek has been moving in that direction for months. Its V4 model was tuned to run on Huawei’s Ascend 950 when it launched in April, and Chinese cloud providers subsequently placed orders for hundreds of thousands of the chips.

Nvidia has been open about why it sees that shift as a problem. Jensen Huang described DeepSeek running on Huawei chips as a “horrible outcome” for America, arguing that export controls risk pushing China’s AI software ecosystem towards Chinese hardware.

That is the bigger issue to watch rather than the size of any individual order. Every model optimised for Ascend creates more software and tooling that does not depend on Nvidia’s CUDA ecosystem, which has been one of the company’s biggest advantages and a major barrier to competing hardware.

The hardware strategy is not settled, either. DeepSeek has separately been reported to be developing its own inference chip with SMIC, which would make a large Huawei order more of a bridge than a permanent destination if that project succeeds.

Chinese chip design is changing under the same pressure. Export controls have encouraged domestic developers to move from general-purpose GPUs towards custom ASICs, which can be cheaper to produce on the manufacturing processes available inside China.

The scale is what makes the reported order significant. A one-gigawatt data centre cannot be supplied with accelerators simply from existing inventory, so a commitment of this size would say something about Huawei’s ability to manufacture at scale as well as DeepSeek’s plans.

Huawei has been expanding Ascend production to meet growing demand. The company has been increasing output through 2026 and targeting a sharp rise in AI chip revenue, a strategy that depends on customers with large computing requirements making commitments of this kind.

Money does not appear to be the immediate constraint. DeepSeek has been raising funds at multibillion-dollar scale, while its founder has described artificial general intelligence as the company’s goal, an ambition that requires substantial computing capacity.

The economics inside China are different as a result. DeepSeek has been able to price aggressively in part because it does not have to buy Western hardware at Western prices, while a domestic chip supply chain helps preserve that advantage.

Most of the details remain unconfirmed. The order value, number of chips, specific Ascend generation, delivery schedule, and whether a contract has actually been signed have not been disclosed.

The data centre itself has not been publicly confirmed by its reported owner either. DeepSeek has not acknowledged the Ulanqab project, and reporting about it has relied on unnamed sources since July.

The broader direction is clearer than the individual details. A Chinese AI lab operating at the frontier is increasingly building around domestic accelerators and domestic computing capacity. That trend was already underway, and a Huawei order would be another sign that it is continuing.