By Alice Ye in AI — 01 Sep 2026

ChinaBiz Briefing | Huawei's Record Revenue, China AI Capex Surge, EV Deliveries Reset

China's technology sector delivered a dense slate of results and market data on September 1, painting a consistent picture: companies across AI, autonomous driving, and electric vehicles are prioritizing long-cycle investment over near-term profitability — and the capital commitments are accelerating, not moderating. From Huawei's record revenue paired with a 37% profit collapse, to BofA's data showing Chinese AI models dominating global developer platforms, to Leapmotor's second consecutive 100,000-unit month, the day's disclosures collectively signal that China's tech buildout is entering a higher-intensity phase with structural consequences for global competition.

Huawei Posts Record H1 Revenue — Then Spends the Profits Away

Huawei reported first-half 2026 revenue of RMB 467.8 billion (US$64.97 billion), a 9.55% year-on-year increase and a new half-year record, while net profit plunged 36.77% to RMB 23.4 billion. The culprit was deliberate: R&D expenditure surged 25.2% to RMB 121.4 billion — equivalent to RMB 670 million per day and roughly 26% of revenue, a ratio approximately double that of Apple or Alphabet. Inventories ballooned 42% to RMB 277.5 billion as Huawei aggressively pre-positioned components against escalating export control risk, swinging operating cash flow from a RMB 31.2 billion inflow to a RMB 39.9 billion outflow year-on-year.

The numbers matter because they reveal a company systematically converting earnings into technology sovereignty. Huawei's three investment fronts — Ascend AI chips (the primary domestic Nvidia alternative), HarmonyOS (now on 80 million devices, targeting 100 million by Q4), and its Vehicle Business Unit (revenue up 60%-plus) — each address a structural dependency that U.S. export controls have made commercially urgent. For global supply chain observers, Huawei's inventory trajectory since 2019 sanctions — from roughly RMB 160 billion to RMB 277.5 billion — maps directly onto successive rounds of geopolitical pressure and is unlikely to reverse.

BofA: China AI Models Now Dominate Global Developer Usage as Cloud Capex Nears Doubling

A Bank of America research report published August 31 documents three converging forces reshaping the global AI competitive landscape: rapid model upgrade cycles from both cloud platforms and independent labs, selective token price increases driven by compute scarcity, and a dramatic acceleration in infrastructure spending. Combined capex for China's top four cloud platforms is forecast to rise 98% year-on-year in full-year 2026, with Tencent's Q2 capex reaching RMB 53 billion and Alibaba's hitting RMB 68 billion. BofA projects the China cloud market will expand from RMB 389 billion in 2025 to RMB 1.73 trillion by 2030, with AI Model-as-a-Service growing at an 81% CAGR.

The developer usage data is equally consequential. On OpenRouter, DeepSeek V4 Flash led all models with 31.6 trillion tokens consumed, accounting for 22% of weekly token volume among the top 50 models — up 4.7 percentage points from July. On Vercel, DeepSeek held approximately 30% of token usage share versus Anthropic's 25%. The monetization gap remains stark — Anthropic captured roughly 65% of Vercel spend — but the volume trajectory confirms that Chinese open models are structurally embedded in global developer workflows. ByteDance's Doubao led China's consumer chatbot market with 171.3 million weekly DAUs, more than five times DeepSeek's second-place 30.7 million.

Tencent's Hunyuan Hy4 Jumps 22 Places in Coding Rankings; Goldman Sees 47% Upside

Tencent's Hunyuan Hy4 preview, released August 28, represents the company's most significant model generational leap to date: total parameters expanded 2.6x to 770 billion, context window extended fourfold to 1 million tokens, and its global coding rank vaulted from 28th to 6th on Code Arena WebDev. Demand was immediate enough to trigger infrastructure strain — Tencent's WorkBuddy platform reported task queuing backlogs within hours of launch, requiring an emergency inference cluster expansion. Goldman Sachs reaffirmed a HK$670 price target, implying 47.2% upside from current levels, while projecting near-zero EPS growth in Q4 2026 as capex intensity peaks.

Goldman's structural thesis centers on Tencent's "product-model flywheel": Hy4 is deployed first through WorkBuddy and CodeBuddy, where real user interactions generate training signals that feed directly back into subsequent model iterations — a closed-loop data architecture that rivals cannot easily replicate without equivalent product distribution. Tencent's Q2 capex of RMB 52.8 billion, up 176% year-on-year, provides the financial foundation. The near-term earnings drag is real; the medium-term differentiation argument is structurally coherent.

Zhipu AI's API Revenue Surges 27x — Gross Margin Halves in the Process

Zhipu AI reported H1 2026 revenue of RMB 954 million, up 399.7% year-on-year, already exceeding its full-year 2025 total. The driver was a 27-fold surge in API and open-platform revenue to RMB 825 million, lifting that segment's share of total revenue from 15% to 87% in twelve months. The cost: consolidated gross margin fell from 50% to 26.4%, as cost of sales surged 635% on rising compute fees. Adjusted net loss widened 12.1% to RMB 1.96 billion, with R&D spending running at 2.23 times H1 revenue. With over 93% of IPO proceeds deployed, a HK$31.4 billion July placement now serves as the primary liquidity buffer.

The margin compression is a deliberate transition rather than structural deterioration — API gross margin itself improved from negative to 24.6%, and average API selling prices rose 101% since January. But the clock is running. Zhipu's path to sustainability depends on domestic chip supply normalization (management projects a volume production wave within three to six months), the capability trajectory of the pending GLM-5.5, and whether its "Co-work" enterprise automation and cybersecurity verticals can generate higher-value, stickier revenue than volume API calls alone.

Horizon Robotics reported H1 2026 revenue of RMB 2.055 billion, up 32.9% year-on-year, as its ADAS chip market share among domestic independent brands surpassed 50% for the first time — approximately double its nearest competitor. Licensing and services revenue grew 52.7% to RMB 1.13 billion, lifting its share of total revenue to 55% and carrying a 90.4% gross margin. The adjusted net loss widened 25.4% to RMB 1.67 billion as R&D spending reached 134% of revenue. CEO Yu Kai guided for full-year 2026 shipments exceeding 5 million units and revenue above RMB 5 billion, with breakeven targeted around 2028.

The competitive significance lies in OEM breadth. Horizon's HSD intelligent driving solution has secured nominations across all five of China's top-selling domestic automakers, plus Toyota (via GAC Toyota) and Volkswagen (via the Carizon joint venture covering seven electrified models in 2026, expanding to approximately 20 under the CEA architecture from 2027). For international investors, Horizon's position as one of only three suppliers capable of supporting Chinese OEM export programs for intelligent driving systems — against a backdrop of 65.3% year-on-year growth in China's passenger vehicle exports in H1 2026 — represents a structural advantage that is difficult to replicate quickly.

Momenta Approaches Breakeven but Pledges to Accelerate Spending

Momenta, China's leading third-party urban NOA supplier, reported H1 2026 revenue of RMB 1.60 billion, up 75.9%, with adjusted net loss compressing 96.6% to RMB 14.1 million — near-breakeven by the adjusted metric. Gross margin expanded to 73.2%. Management responded by committing to accelerate, not consolidate: GPU capacity is targeted to expand from 20,000 to as many as 60,000 units to support the R7 world model rollout, which enters production vehicles including Mercedes-Benz GLC/GLE, BMW neue Klasse iX3, and multiple Volkswagen programs in Q3 2026. The company holds 114 undelivered design wins out of 219 cumulative nominations.

The structural tension is explicit: Momenta operates with automotive supply chain revenue cadence but AI infrastructure cost dynamics. The RMB 420 million gap between gross profit and total operating expenses in H1 must close through revenue outpacing R&D growth — a trajectory the numbers support, but one that management has declined to commit to on a specific timeline. The L4 robotaxi program, with first production-spec vehicles deploying in Q4 2026 and partnerships spanning Uber (Munich), Grab (Southeast Asia), and SAIC Mobility (Shanghai), represents the highest-upside but most regulatory-constrained growth vector.

China EV Upstarts: Leapmotor Extends Lead, Peers Target Q4 Recovery

Leapmotor delivered 103,129 vehicles in August — its second consecutive month above 100,000 units and a 80.7% year-on-year increase — citing vertical integration (controlling approximately 65% of total vehicle costs across 18 manufacturing facilities) as the structural driver of its cost and volume advantage. Xpeng delivered 39,107 units (up 3.7% year-on-year), Li Auto 37,679 (up 32.1%), and NIO 35,836 (up 14.5%). All four peers remain on multi-month year-on-year decline trajectories on a full-year basis, though August marked sequential improvement for Li Auto and NIO's flagship brand.

The competitive reset heading into Q4 is consequential. Xpeng is targeting 60,000 monthly units in Q4 with four new SUV models entering market sequentially, anchored by the G9L's September launch featuring its second-generation VLA intelligent driving system. Li Auto is accelerating into the premium EV segment with the next-generation MEGA (launching September 2), the i9 flagship pure-electric SUV (mid-September), and a Middle East market entry event in Dubai on September 3. NIO's Onvo budget brand posted its first simultaneous year-on-year and month-on-month decline in five months, representing the primary drag on group momentum as the brand recalibrates positioning in a crowded mass-market segment.

What to Watch Next

Alibaba's Cloud Summit (September 22–24) is the most immediate catalyst for the AI model landscape, with a potential Qwen upgrade expected. Tencent management's remarks at the Goldman Sachs Asia Leaders Conference on September 1 will be closely parsed for clarity on the dual Hunyuan/WeLM model strategy and capex depreciation management. In EVs, September–October represents the seasonally strongest selling period, and whether Xpeng and Li Auto can translate new model launches into the 50,000–60,000 monthly delivery range will determine whether the peer gap with Leapmotor narrows or widens. On the chip front, Zhipu's projection of a domestic advanced chip supply wave within three to six months — if accurate — would materially shift inference cost economics across the entire Chinese AI model ecosystem.

Related Coverage:

BofA: China AI Model Upgrade Wave Accelerates as Cloud Giants Ramp Up Spending Huawei’s H1 Revenue Hits Record as R&D Push Drives Profit Down 37%Momenta Nears Breakeven as Revenue Jumps 76% in H1, but AI Spending Accelerates
Horizon Robotics Turns Price War Into Tailwind as H1 Revenue Climbs 33%, Adjusted Loss Widens Zhipu’s H1 Revenue Surges 400% as API Pivot Cuts Gross Margin in Half Tencent’s Hy4 Delivers a Generational AI Leap as Goldman Reaffirms HK$670 Target Leapmotor Tops 100,000 Again as China’s EV Upstarts Enter a Q4 Reset