Huawei Gains Ground as Nvidia Loses AI Chip Market Share in China

China's artificial intelligence race with the United States is increasingly becoming a competition over advanced computer chips and computing power. While US chip giant Nvidia continues to dominate globally, Chinese technology company Huawei is rapidly expanding its position in China's domestic AI chip market.

During US President Donald Trump's May summit with Chinese President Xi Jinping, Nvidia CEO Jensen Huang visited Beijing, where he attracted significant public attention, including while eating the popular Chinese dish "zhajiangmian" noodles. However, the warm reception did not translate into stronger sales for Nvidia's advanced AI chips in China.

US Export Controls Changed the Market

US export restrictions on advanced technology, introduced over national security concerns, initially prevented Nvidia from selling its high-end H200 AI chips in China.

Although Huang later secured approval from President Trump to resume sales, China had already shifted its focus toward encouraging businesses to use domestically designed AI chips produced by companies such as Huawei.

Speaking to The reports, Huang said Nvidia had once controlled about 95% of China's AI chip market before export controls took effect. "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 added that while national security remains important, the United States should also continue expanding its technology industry and exports. "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 maximise our exports."

Huang also admitted that Chinese competitors have grown into "giants," reducing America's advantage in China's AI chip market.

Huawei Leads China's Domestic AI Chip Industry

Since 2019, when the United States restricted Huawei—and later China—from purchasing some of the world's most advanced computer chips and semiconductor manufacturing equipment, Chinese companies have accelerated efforts to build a self-sufficient semiconductor industry.

Read More: Samsung and Nvidia Engage in Strategic Talks Over Next-Gen Chip Manufacturing

Huawei has become the country's leading AI chipmaker as Chinese AI firms, including DeepSeek, continue improving chip performance while reducing costs.

Nvidia and Advanced Micro Devices (AMD) still dominate the global AI chip industry, particularly in the United States. However, Huawei has made major progress within China.

According to research firm Bernstein, Nvidia held around 40% of China's AI chip market in 2025, roughly equal to Huawei's share.

Bernstein now expects Nvidia's market share to fall to about 8% in 2026, while Huawei's share could rise to nearly 50%.

Antonia Hmaidi, a semiconductor specialist at the Mercator Institute for China Studies, said: "Nvidia has definitely lost significant ground to Huawei, which (now) leads domestically."

Industry analysts believe Huawei's Ascend 950 series AI chips are broadly comparable to Nvidia's H200 chips in several commercial applications.

He Hui, Director of Semiconductor Research at Omdia, said China now has greater confidence in its own semiconductor capabilities. "China now believes in its own self-sufficiency and supply capabilities."

Last September, Huawei announced that it had begun deploying some of the world's most powerful AI computing clusters by combining thousands of domestically produced chips despite US export restrictions.

He Tingbo, head of Huawei's semiconductor business, commented on the company's technological progress: "We have found pretty good solutions."

When asked whether Huawei could surpass global competitors, she said: "Who can walk faster? Huawei or other companies? I don't know the answer. I think only time will tell."

Nvidia Still Plays a Critical Role

Despite Huawei's rapid growth, analysts say Nvidia remains essential for China's most advanced AI development.

The semiconductor industry depends on a highly global supply chain, making it impossible for any single country to independently produce the world's most advanced AI chips.

Rui Ma, founder of Tech Buzz China, said demand for AI chips in China still exceeds available supply.

Several recent smuggling cases involving Nvidia AI chips also highlight continued demand for the company's technology despite export restrictions.

Nvidia designs some of the world's most powerful AI processors, but manufacturing depends on Dutch company ASML's extreme ultraviolet (EUV) lithography machines, which incorporate US technology.

Taiwan Semiconductor Manufacturing Company (TSMC) uses those machines to produce many of Nvidia's advanced AI chips.

China remains unable to purchase Nvidia's most advanced processors or ASML's EUV chipmaking equipment because of US restrictions.

Although Huawei's latest AI chips have improved significantly, analysts say they still trail Nvidia's most advanced technologies in several key areas.

Training advanced AI models, including DeepSeek's systems, continues to rely heavily on Nvidia hardware.

Chinese universities and major technology companies also continue seeking access to chips such as the H200 for research and development.

Nvidia Continues Strong Global Growth

While Nvidia faces challenges in China, global demand for AI technology remains extremely strong.

The company expects revenue of approximately $91 billion during the May-July period, compared with nearly $82 billion in the previous quarter, excluding data centre computing revenue from China.

Nvidia reported annual revenue of nearly $216 billion, while Huawei generated $126 billion over a comparable period.

DeepSeek Supports Huawei's AI Ecosystem

Chinese AI company DeepSeek announced that its latest V4 AI model, released in April, has been adapted to run on Huawei's advanced Ascend chips.

Paul Triolo, partner at DGA-Albright Stonebridge Group, said there is likely significant collaboration between DeepSeek and Huawei to train future AI models using domestic hardware.

Morningstar analyst Phelix Lee said Huawei chips have the potential to replace Nvidia hardware over time but does not expect an immediate transition. "We don't expect an abrupt switch toward (Huawei's) Ascend."

To comply with US regulations, Nvidia also developed the lower-performance H20 AI chip specifically for the Chinese market. The company continued shipping H20 chips until last year, although deliveries gradually declined, according to Counterpoint Research analyst Brady Wang.

China's position regarding imports of Nvidia's H200 chips remains uncertain.

Nvidia has stated it has not sold H200 chips in China.

During the company's recent shareholder meeting, Jensen Huang said: "Yet to generate any revenue, and we are uncertain whether any imports will be allowed into the country."

Huawei Eyes Global Expansion

Huawei, already the world's largest supplier of telecommunications network equipment, is also seeking to expand its semiconductor business internationally.

The company says it operates across 170 countries and regions with the goal of "bringing digital to every person, home and organization for a fully connected, intelligent world."

However, analysts note that China's domestic demand for advanced chips still exceeds current production capacity.

Brady Wang of Counterpoint Research said that as China's manufacturing capacity improves and production costs become more competitive, Huawei could expand into overseas markets, including Southeast Asia.

He added that China's long-term strategy of achieving technological self-sufficiency and eventually exporting its own technologies is expected to continue regardless of whether Nvidia is permitted to sell more chips in China.

China's AI chip market is undergoing a significant transformation. Huawei has become the country's leading domestic competitor as government support and export restrictions reshape the semiconductor industry. Although Nvidia remains the global leader in advanced AI technology and continues to see strong worldwide growth, its position inside China has weakened considerably. As both companies continue investing in AI innovation, competition between the United States and China in advanced semiconductor technology is expected to remain intense.