High demand for Huawei's AI chips, coupled with manufacturing constraints, has led the company to prioritize AI production and slow down the manufacturing of its premium Mate 60 phones. This situation comes amid a global race for AI functionality and Huawei's efforts to rebuild following U.S. sanctions in 2019. Huawei's challenges have been exacerbated by U.S. restrictions on AI processing chip sales to China, prompting the country to enhance its computing power and rely more on domestic alternatives.

Huawei has prioritized the production of its Ascend AI chips over the Kirin chips, slowing down the manufacturing of Mate 60 smartphones. The company is also aiming to improve its yield rate in hopes of making this production arrangement short-term. The low-key nature of Huawei's chip manufacturing capability, coupled with limited public information, has contributed to the company's ongoing advancements despite the challenges it faces.

Additionally, the production bottleneck has affected other Huawei products, such as the Ascend-equipped computing unit MDC 810, leading to delays in delivering flagship models for Chinese automakers. Despite these challenges, Huawei managed to regain its status as China's top smartphone seller and has seen strong demand for its Mate 60 series, reflecting the high interest in its products despite the production constraints.