Key facts
- Nvidia's advanced AI chip sales in China have stalled due to U.S. export controls and domestic competition.
- Huawei is emerging as a leading domestic competitor, with its Ascend chips comparable to Nvidia's H200.
- Projections suggest Huawei will hold a 50% market share in China's AI chip market this year, while Nvidia's share may drop to 8%.
- Despite U.S. restrictions, Chinese AI companies are collaborating with Huawei to use domestic hardware.
- Nvidia's global revenue is projected to reach $91 billion for May-July, indicating continued strong demand outside of China.
Nvidia's dominance in China's advanced artificial intelligence chip market is being challenged by domestic companies, particularly Huawei, as U.S. export controls and China's push for self-sufficiency reshape the industry.
Once holding a commanding 95% market share, Nvidia is now facing significant competition. U.S. restrictions initially stalled sales of its high-end chips, and by the time a reprieve was granted, China had accelerated its development of indigenous semiconductor capabilities. Huawei, a key player in this shift, has developed its Ascend series of AI chips, which analysts consider roughly comparable to Nvidia's powerful H200 offerings.
Jensen Huang, CEO of Nvidia, has acknowledged that Chinese competitors have become "giants" and that the U.S. has lost its edge in this market. Bernstein, a research firm, projects that Nvidia's market share in China's AI chip sector could fall to around 8% this year, while Huawei's share is expected to rise to approximately 50%.
Despite the challenges, Nvidia's global AI chip demand remains strong, with the company forecasting significant revenue growth. However, the trend in China indicates a clear shift towards domestic solutions, with companies like DeepSeek adapting their AI models to run on Huawei's chips, signaling a potential future where Chinese hardware plays a more central role in the nation's AI development.