Fast Company
Nvidia’s AI chip sales are stalling in China. Here’s who’s gaining market share
In the race between the U.S. and China to develop artificial intelligence, the battle over hardware and computing power is heating up as Chinese companies like Huawei overtake global industry leaders like Nvidia in their home market.Jensen Huang, the CEO of computer chip giant Nvidia, was mobbed by onlookers as he hit the streets for the “zhajiangmian” noodles while visiting Beijing during U.S. President Donald Trump’s May summit with Chinese leader Xi Jinping. But his celebrity status has not translated into success in selling Nvidia’s advanced chips in China.Controls imposed by Washington on exports of advanced technology due to national security concerns initially stalled sales of Nvidia’s advanced H200 AI chips there. By the time Huang won a reprieve, with Trump agreeing to their sale, Beijing had switched to encouraging use of domestically designed chips made by local rivals led by Huawei.Huang has acknowledged that the U.S. has lost its edge in China’s advanced AI chips market as Chinese competitors have become “giants.”“Well, we were in China for 30 years, and before the export control banned Nvidia out of China we had about 95% market share, and so we were competing just fine,” he said in a recent interview with The Associated Press.“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,” he said.
Among Chinese chipmakers, Huawei leads
Since the U.S. in 2019 excluded Huawei, and later China in general, from buying some of the world’s most powerful computer chips and chipmaking machinery, Chinese semiconductor makers have rushed to become self-sufficient, developing their own chips and knowhow.Santa Clara, California-based Nvidia and its main rival AMD, or Advanced Micro Devices, dominate in the U.S. AI chip sector and much of the global market, but Huawei has made big inroads in China as Chinese AI companies like DeepSeek drive a push for improved chip performance and cost-effectiveness.A report by Bernstein, a global equity research and brokerage firm, estimated that Nvidia had about a 40% market share in China’s AI chips market in 2025, roughly matched by Huawei. Bernstein has predicted Nvidia’s market share will shrink to around 8% this year, while Huawei’s will likely grow to about 50%.Nvidia “has definitely lost significant ground to Huawei, which (now) leads domestically,” said Antonia Hmaidi, with the Mercator Institute for China Studies who focuses on semiconductors.By some measures, Huawei’s most advanced commercial AI chips, the Ascend 950 series, can be seen as roughly comparable to Nvidia’s H200, considered in the industry to be among Nvidia’s most powerful products, according to industry analysts.“China now believes in its own self-sufficiency and supply capabilities,” said He Hui, director of semiconductor research at research and advisory firm Omdia.Last September, Huawei also said it was rolling out some of the world’s most powerful AI computing clusters, combining the power of thousands of chips like its global rivals, despite having to rely on Chinese-made semiconductors due to the U.S. export controls.Asked at a recent event about how Huawei’s chip technology compares its rivals’, including in the United States, He Tingbo, head of Huawei’s semiconductor business, said: “We have 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 is still vital for Chinese AI
The semiconductor supply chain is global and no single country can build an advanced AI chip on its own.Demand still exceeds available supply in China when it comes to AI chips, said Rui Ma, founder of Tech Buzz China.Several recent cases linked to smuggling Nvidia’s AI chips into China to circumvent export controls show the appetite for its technology.Nvidia designs the world’s most powerful AI chips. To make them, it relies on Dutch company ASML’s extreme ultraviolet lithography, or EUV, machines, which rely on U.S, components and technologies. Taiwan chipmaking giant TSMC uses those machines to make a large share of Nvidia’s top AI chips at its fabrication plants.China is barred from buying Nvidia’s most powerful AI chips or ASML chipmaking EUV machines.Huawei’s high-performance chips lag behind Nvidia’s most advanced technologies in many areas. Cutting edge technologies in China such as training AI models like DeepSeek’s still rely on Nvidia AI chips, analysts say.Chinese universities and other big tech companies also want chips like the H200, in part for research and development.Nvidia’s global sales are still expanding as AI demand surges. The company expects around $91 billion of revenue in May-July, up from nearly $82 billion in the previous quarter, excluding any data center compute revenue from China.Nvidia’s latest annual revenue was almost $216 billion, while Huawei’s was $126 billion for a comparable period.
Huawei is catching up
DeepSeek, the fast-growing Chinese rival of OpenAI’s ChatGPT or Anthropic’s Claude, said that its latest V4 AI model rolled out in April was adapted for Huawei’s advanced Ascend chips.Paul Triolo, a partner at DGA-Albright Stonebridge Group, said it is likely there is “significant effort going into collaboration between DeepSeek and Huawei” to train future DeepSeek models on domestic hardware.That shows how Chinese-made chips can potentially replace Nvidia ones, said Phelix Lee, an analyst at Morningstar. But he added that, “We don’t expect an abrupt switch toward (Huawei’s) Ascend.”Nvidia engineered its H20 chips, stripping down their computing power, so they could be sold to China without violating U.S. restrictions. Up to last year, it was still selling H20 chips in China, although shipments were gradually declining, said Brady Wang, a Taipei-based semiconductor analyst with Counterpoint Research.Beijing’s public stance on imports of H200 chips has been unclear and Nvidia has said it has not sold H200 chips in China. At Nvidia’s recent shareholders meeting, Huang said it had “yet to generate any revenue, and we are uncertain whether any imports will be allowed into the country.”
Huawei also has global chip aspirations
Already the world’s biggest supplier of telecommunications network equipment, Huawei has been expanding in global markets and its chips are no exception.The company says it operates in 170 countries and regions with a mission of “bringing digital to every person, home and organization for a fully connected, intelligent world.”While there may be demand in other countries for its chips, China’s production capacity for advanced chips still falls short of demand at home.As China’s advanced chip manufacturing capacity increases and pricing become more competitive, they could gain market share in regions like Southeast Asia among others, said Wang of Counterpoint.“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.
AP journalists Josh Boak in Sherman, Texas, and Kelvin Chan in London contributed to this report.
—Chan Ho-Him, AP Business Writer
1 month ago
