China Telecom’s $1.7bn server deal hands Huawei a big win
China Telecom awarded a $1.7bn tender for 40,000 servers, with roughly 71% of the value flowing to Huawei's Kunpeng ecosystem despite Huawei not bidding directly. The larger package of 28,000 servers runs on Arm-based Kunpeng chips, replacing Intel and AMD x86 processors. This mirrors similar orders from China Mobile and China Unicom, all part of Beijing's Xinchuang campaign to purge foreign technology from critical infrastructure. The market for Xinchuang hardware is projected to reach nearly 789 billion yuan in 2026. Analysts note the shift is now AI-driven, as mixed CPU-GPU systems for agent-style AI and reinforcement learning favor Arm server chips. Caveats remain: Kunpeng still relies on a British-licensed Arm instruction set, and Chinese chips lag in the most demanding AI training workloads, keeping RISC-V on Beijing's radar as a fully sovereign alternative.
