AI Chip Showdown: Nvidia's China Sales Plummet as Huawei Seizes Lead

The intensifying rivalry between the U.S. and China in the development of artificial intelligence is notably playing out in the critical sector of hardware and computing power. Chinese companies, led by Huawei, are making significant strides to overtake global industry leaders like Nvidia within their home market, marking a fierce battle for technological supremacy.

Jensen Huang, the CEO of computer chip giant Nvidia, once enjoyed celebrity status in China, as evidenced by his visit to Beijing. However, his company's success in selling advanced AI chips in the region has been severely impacted by U.S. controls on exports of advanced technology, imposed due to national security concerns. These restrictions initially stalled sales of Nvidia’s advanced H200 AI chips. Even after a reprieve that allowed their sale, Beijing had shifted its focus, actively encouraging the use of domestically designed chips made by local rivals, primarily Huawei. Huang himself has acknowledged that the U.S. has lost its edge in China’s advanced AI chips market, with Chinese competitors growing into "giants." While Nvidia held approximately 95% market share in China for 30 years prior to the export ban, the landscape has drastically changed.

Since the U.S. in 2019 began excluding Huawei, and later China in general, from acquiring some of the world’s most powerful computer chips and chipmaking machinery, Chinese semiconductor manufacturers have embarked on an urgent quest for self-sufficiency. This drive has led to the development of their own chips and expertise. While Santa Clara, California-based Nvidia and its main rival AMD dominate the U.S. AI chip sector and much of the global market, Huawei has made substantial inroads in China. Chinese AI companies like DeepSeek are fueling this push for improved chip performance and cost-effectiveness from domestic suppliers.

A report by Bernstein, a global equity research firm, estimated that Nvidia held about a 40% market share in China’s AI chips market in 2025, roughly matched by Huawei. However, Bernstein predicts Nvidia’s market share will shrink to around 8% this year, while Huawei’s is projected to grow to about 50%, firmly establishing its domestic leadership. Antonia Hmaidi, a semiconductor expert at the Mercator Institute for China Studies, noted that Nvidia has "definitely lost significant ground to Huawei."

By some industry measures, Huawei’s most advanced commercial AI chips, the Ascend 950 series, are considered roughly comparable to Nvidia’s H200, which is regarded as one of Nvidia’s most powerful products. This parity signifies China's increasing confidence in its own self-sufficiency and supply capabilities, according to He Hui, director of semiconductor research at Omdia. Last September, Huawei also announced the rollout of some of the world’s most powerful AI computing clusters, combining the strength of thousands of its own chips, despite having to rely on Chinese-made semiconductors due to U.S. export controls. He Tingbo, head of Huawei’s semiconductor business, stated, "We have found pretty good solutions," regarding their chip technology compared to rivals, adding that "only time will tell" who will advance faster.

Despite Huawei's advancements, the semiconductor supply chain remains global, making it challenging for any single country to build an advanced AI chip entirely on its own. Demand for AI chips in China still exceeds available domestic supply, a situation highlighted by recent cases of smuggling Nvidia’s AI chips into China to circumvent export controls, demonstrating the strong appetite for its technology. Nvidia relies on Dutch company ASML’s extreme ultraviolet lithography (EUV) machines, which incorporate U.S. components, with Taiwan chipmaking giant TSMC manufacturing a large share of Nvidia’s top AI chips. China is currently barred from buying Nvidia’s most powerful AI chips or ASML’s EUV machines. While Huawei’s high-performance chips are catching up, they still lag behind Nvidia’s most advanced technologies in many areas. Cutting-edge technologies in China, such as training AI models like DeepSeek’s, continue to rely on Nvidia AI chips, and Chinese universities and major tech companies still seek chips like the H200 for research and development.

Nvidia has engineered its H20 chips, with reduced computing power, specifically to comply with U.S. export restrictions for sale in China. Shipments of these H20 chips were still occurring up to last year, though gradually declining. Beijing’s public stance on imports of H200 chips remains unclear, and Nvidia has not sold H200 chips in China, with CEO Huang expressing uncertainty about whether any imports will be allowed into the country.

Collaboration among Chinese entities is strengthening, with DeepSeek, a rapidly growing Chinese AI rival, adapting its latest V4 AI model for Huawei’s advanced Ascend chips. This significant effort between DeepSeek and Huawei to train future models on domestic hardware signals a potential, albeit not abrupt, shift away from Nvidia chips, as noted by analysts. Nvidia's global sales continue to expand dramatically due to surging AI demand, with projected revenues of $91 billion for May-July, excluding China data center compute revenue. Nvidia's latest annual revenue was almost $216 billion, while Huawei's was $126 billion for a comparable period.

Huawei, already the world’s largest supplier of telecommunications network equipment, is actively expanding its chip business in global markets. The company operates in 170 countries and regions, aiming for a "fully connected, intelligent world." While international demand for its chips may exist, China’s current production capacity for advanced chips still falls short of its domestic needs. However, as China’s advanced chip manufacturing capacity grows and pricing becomes more competitive, Huawei’s chips could gain market share in regions like Southeast Asia and beyond. Analysts emphasize that China’s long-term strategy of pursuing technological self-sufficiency, with the ultimate goal of exporting its technologies, is a steadfast commitment unlikely to be swayed by Nvidia’s ability to sell chips in China.