Nvidia's AI Chip Dominance Crumbles as Huawei Rises, Seizing Market Share in China

Nvidia's AI Chip Dominance Crumbles as Huawei Rises, Seizing Market Share in China​

The global race for artificial intelligence supremacy is witnessing a significant realignment of hardware power. While U.S.-based giants like Nvidia currently dominate the international advanced chip market, reports indicate that Chinese domestic rivals, led by companies such as Huawei, are making serious inroads into critical markets within China itself. These developments underscore the rapid evolution of indigenous semiconductor capabilities amidst intense geopolitical pressure.

Jensen Huang, CEO of Nvidia, has publicly acknowledged a shift in the competitive landscape, noting that U.S. market leadership is being challenged as Chinese technology firms solidify their position domestically. This challenge is fueled by years of export controls and government push for technological self-sufficiency within China.

Market Share Battle: Nvidia's Share Expected to Plunge Amidst Rising Competition​

Financial analysis suggests a dramatic shift in the battle over AI chip market share in China. A report from Bernstein estimates that Nvidia held roughly 40% of the Chinese AI chips market in 2025, with Huawei holding a similar proportion at that time. The outlook is considerably less favorable for U.S. firms going forward.

Bernstein predicts that Nvidia's market share will shrink substantially to approximately 8% this year, while Huawei’s domestic market share is forecast to grow significantly to around 50%. Antonia Hmaidi of the Mercator Institute for China Studies summarized this trend, stating that Nvidia "has definitely lost significant ground to Huawei, which (now) leads domestically."

Advanced Chinese Chipmakers Challenge Global Standards​

The rise of companies like Huawei stems from a strategic national push initiated after sanctions began in 2019. These constraints prompted Chinese semiconductor firms to aggressively pursue self-sufficiency and develop their own advanced chips and knowhow.

Industry experts note that Huawei's Ascend 950 series, one of its most advanced commercial AI chips, is considered comparable in some aspects to Nvidia's H200, which remains among the industry’s most powerful products. He Hui, director of semiconductor research at Omdia, commented that "China now believes in its own self-sufficiency and supply capabilities."

Furthermore, local firms like DeepSeek, a fast-growing AI rival, are integrating these domestic technologies. DeepSeek reported that its latest V4 AI model rollout in April has been adapted specifically for Huawei's advanced Ascend chips. Phelix Lee of Morningstar noted this potential replacement capability but added that an "abrupt switch toward (Huawei’s) Ascend" is not expected immediately.

Global Demand and Financial Health of Chip Leaders​

Despite domestic competition gaining ground, the underlying demand for advanced AI technology within China remains robust, with some cases linked to smuggling Nvidia chips reported as evidence of appetite. However, Nvidia's ability to penetrate this market is restricted by supply chain dependencies.

Nvidia’s cutting-edge chips require manufacturing processes relying on both U.S. components and Dutch ASML extreme ultraviolet (EUV) lithography machines, which are unavailable for China. In contrast, while Huawei's high-performance chips lag in some areas compared to Nvidia's most advanced technologies, progress is being made.

Financially, the two companies show diverging paths. Nvidia’s latest annual revenue stood near $216 billion, while Huawei reported $126 billion for a comparable period. For the recent quarter, Nvidia expects around $91 billion in revenue for May-July, up from nearly $82 billion, excluding data center compute revenue from China.

Future Outlook: Self-Sufficiency vs. Global Supply Chain Reliance​

The geopolitical dynamics suggest that China's commitment to technological self-sufficiency is deeply ingrained. While the semiconductor supply chain remains inherently global, as noted by the fact that no single country can build advanced AI chips alone, Chinese production capacity is increasing.

Counterpoint Research analyst Brady Wang has noted that Nvidia gradually began selling H20 chips in China prior to last year, though shipments were already declining. Regarding long-term trends, Wang stated that "China’s strategy of pursuing technological self-sufficiency" is unlikely to change regardless of whether Nvidia can sell its chips in the country.