(Yicai) June 18 -- Shares of Digital China Group slowed their pace of falling after the server maker said to Yicai today that it is running normally and Huawei Technologies has not informed it about terminating the pair's partnership in Ascend processors.

Digital China [SHE: 000034] closed 1.9 percent lower at CNY24.2 (USD3.30) in Shenzhen today after tanking by 10 percent yesterday following a rumor of Huawei considering adjusting its business, which led speculators to suggest the telecoms giant would start making its own servers instead of outsourcing production to foundries such as Digital China.

Huawei is still talking about its Ascend business without a consensus, an executive at the Shenzhen-based firm said today. Ascend is a key part of Huawei's AI layout.

The rumor began from an interview with an insider at Digital China but was blown out of proportion in the capital market, an informed source told Yicai.

"Huawei is likely to enhance its efforts in direct sales in some fields, which, however, does not mean this move will affect the Ascend business, and its business partners will still have great expectations in the artificial intelligence ​​inference business in the second half of this year," the above-mentioned source said to Yicai.

Digital China became Huawei’s ninth global dealer in 2018 and its self-developed products are an integral part of Huawei’s industrial chain. In 2019, the hardware firm started making servers, providing government agencies and companies with smart Kuntai servers carrying Huawei’s Kunpeng and Ascend processors.

Even if the partnership ended, Digital China is likely to stay afloat as the Shenzhen-based firm responded to the rumor by saying that its Kunpeng and Ascend revenue took up just 3 percent of its total of CNY119.6 billion (USD16.5 billion) last year.

Besides Digital China, Huawei counts mainland-listed firms such as iSoftStone Information Technology Group, Talkweb Information System, GRG Banking Equipment, Business-Intelligence of Oriental Nations, and Yuandong Drive Shaft as some of its Kunpeng and Ascend partners.

Editor: Emmi Laine