HONG KONG – Nvidia is losing ground in China’s artificial intelligence chip market as domestic competitors led by Huawei strengthen their position, highlighting how years of U.S. export restrictions have accelerated China’s push for semiconductor self-sufficiency.
The shift underscores a broader strategic realignment in the global AI industry, where access to advanced computing hardware has become central to technological competitiveness. While Nvidia remains the world’s leading AI chip designer, its ability to compete in China has been constrained by U.S. export controls, creating opportunities for Chinese manufacturers to capture market share.
Nvidia Chief Executive Jensen Huang acknowledged the company’s changing position during a recent interview with The Associated Press, saying the company once controlled approximately 95% of China’s AI chip market before U.S. export restrictions significantly limited its business.
“We have to have, number one, make sure that we have national security and that we protect our nation, but we also simultaneously should go and compete and grow our technology industry and maximize our exports,” Huang said.
His comments came after a visit to Beijing in May, where he attracted significant public attention while the United States and China continued discussions on trade and technology issues. Although U.S. President Donald Trump later agreed to permit sales of Nvidia’s H200 AI chips, Chinese policymakers had already intensified efforts to promote domestically designed alternatives.
Huawei emerges as China’s leading AI chip competitor
Since Washington imposed restrictions beginning in 2019 on Huawei and later expanded controls covering China’s access to advanced semiconductors and chipmaking equipment, Chinese companies have accelerated investments in domestic semiconductor development.
Huawei has emerged as the leading beneficiary of that policy shift.
According to research from Bernstein, Nvidia held roughly 40% of China’s AI chip market during 2025, about equal to Huawei’s share. The research firm projects Huawei’s market share could climb to around 50% this year, while Nvidia’s could decline to approximately 8%.
Antonia Hmaidi, a semiconductor specialist at the Mercator Institute for China Studies, said Huawei has become the dominant domestic supplier.
“Nvidia has definitely lost significant ground to Huawei, which now leads domestically,” she said.
Industry analysts say Huawei’s latest commercial AI processors in its Ascend 950 series are broadly comparable in some respects to Nvidia’s H200 chips, although Nvidia continues to lead in cutting-edge AI hardware.
He Hui, director of semiconductor research at Omdia, said China’s confidence in domestic chip development has grown significantly.
“China now believes in its own self-sufficiency and supply capabilities,” He said.
Huawei has also expanded its AI computing infrastructure by deploying large computing clusters powered by thousands of its own processors despite relying on domestically manufactured semiconductors because of continuing export restrictions.
Asked recently how Huawei’s chip technology compares with international competitors, He Tingbo, who heads Huawei’s semiconductor business, said the company has found “pretty good solutions.”
“Who can walk faster? Huawei or other companies? I don’t know the answer,” she said. “I think only time will tell.”
Nvidia remains critical for advanced AI development
Despite Huawei’s rapid progress, analysts say Nvidia’s technology continues to play a vital role in China’s AI ecosystem.
The semiconductor industry remains deeply interconnected globally. Nvidia designs its processors using technology that depends on advanced extreme ultraviolet lithography machines produced by Dutch company ASML, while Taiwan Semiconductor Manufacturing Co. manufactures many of Nvidia’s most advanced chips.
China remains prohibited from purchasing Nvidia’s highest-end AI processors as well as ASML’s most advanced chipmaking equipment under U.S. export controls.
Industry observers note that Huawei’s latest processors still trail Nvidia’s most advanced offerings in several technical areas, particularly for training large AI models.
Chinese AI developers, including DeepSeek, continue to rely on Nvidia hardware for some advanced workloads, while universities and major technology companies also seek access to chips such as the H200 for research and development.
Recent cases involving the alleged smuggling of Nvidia AI chips into China further illustrate continuing demand for the company’s technology despite export restrictions.
AI demand continues to drive Nvidia’s global growth
Although China has become a more difficult market, Nvidia’s worldwide business continues to expand rapidly as investment in artificial intelligence infrastructure accelerates.
The company expects revenue of approximately $91 billion during its May-to-July quarter, excluding any China data-center computing revenue, compared with nearly $82 billion in the previous quarter.
Nvidia generated nearly $216 billion in annual revenue during its latest fiscal year, while Huawei reported approximately $126 billion in revenue over a comparable period.
Nvidia developed its H20 processor specifically to comply with U.S. export restrictions by reducing computing performance. However, shipments into China have gradually declined, according to Brady Wang, a semiconductor analyst at Counterpoint Research.
Huang also told shareholders recently that Nvidia has not yet generated revenue from H200 chip sales in China and remains uncertain whether imports will ultimately receive approval.
Huawei expands long-term global ambitions
Huawei’s ambitions extend beyond China’s domestic market.
Already the world’s largest supplier of telecommunications networking equipment, the company says it operates across 170 countries and regions while pursuing broader digital infrastructure expansion.
Analysts say China’s current manufacturing capacity for advanced chips remains insufficient to fully satisfy domestic demand, limiting exports in the near term.
However, as manufacturing capacity improves and pricing becomes increasingly competitive, Chinese AI chips could become more attractive in overseas markets, particularly across Southeast Asia.
Counterpoint Research analyst Brady Wang said China’s broader strategy is unlikely to change regardless of whether Nvidia eventually regains broader access to the Chinese market.
“China’s strategy of pursuing technological self-sufficiency — and eventually exporting its technologies — is unlikely to change regardless of whether Nvidia can sell its chips in China,” Wang said.
Tags: Nvidia, Huawei, Artificial Intelligence, China, Semiconductors, AI Chips, Export Controls, DeepSeek, Technology, Corporate Strategy
