JAKARTA - Nvidia's AI chip sales in China have stalled after US technology restrictions gave local manufacturers more room. Huawei is now a major player in the domestic market, as Beijing is increasingly serious about promoting semiconductor independence.
Citing a Kyodo News report, Tuesday, June 30, the competition between the US and China in artificial intelligence is not only about software. The scramble for chips and computing power is the hottest field.
Nvidia CEO Jensen Huang was greeted like a celebrity when he visited Beijing. However, that popularity does not automatically make Nvidia's advanced chips easy to enter the Chinese market.
The US export restrictions initially hampered the sale of Nvidia's H200 AI chips. When Washington eased up, Beijing was already pushing the use of domestically designed chips, especially from Huawei.
Huang acknowledged the US position in the Chinese market for advanced AI chips is weakening. He said China's competitors have become "giants".
"We've been in China for 30 years, and before export controls banned Nvidia from leaving China, our market share was about 95 percent," Huang said in an interview with The Associated Press.
Since 2019, the US has restricted Huawei, then China more broadly, from access to the most advanced chips and chip-making machines. The pressure has made Chinese semiconductor manufacturers move quickly to build their own capabilities.
Nvidia and AMD still dominate the US AI chip market and a portion of the global market. However, in China, Huawei continues to make progress. The push also comes from local AI companies such as DeepSeek that need more efficient and cheaper chips.
Bernstein's report estimates Nvidia has about a 40 percent market share of China's AI chips by 2025, almost on par with Huawei. This year, Nvidia's share is forecast to fall to about 8 percent, while Huawei rises to close to 50 percent.
"Nvidia is clearly losing a significant foothold from Huawei, which now leads the domestic market," said Antonia Hmaidi of the Mercator Institute for China Studies.
According to industry analysts, Huawei's most advanced commercial AI chips, the Ascend 950 series, in several sizes can already be compared to Nvidia's H200. The H200 chip itself is one of Nvidia's most powerful products.
"China now believes in its own self-sufficiency and supply capabilities," said He Hui, a semiconductor research director at Omdia.
Even so, Nvidia cannot be crossed off the map of China's AI. The semiconductor supply chain remains global. No country has been able to build the most advanced AI chips alone.
According to Kyodo News, the demand for AI chips in China is still greater than the supply. A number of cases of smuggling Nvidia chips into China also show that the technology of the US company is still very much in demand.
Nvidia designs the world's most powerful AI chips. However, its production depends on US-based ASML's extreme ultraviolet lithography or EUV machines from the Netherlands. EUV is a sophisticated machine for printing very small-sized circuit patterns on modern chips. This technology is the key to the production of high-end semiconductors.
Taiwan chip giant TSMC uses ASML's EUV machines to produce most of Nvidia's high-end AI chips. China is banned from buying Nvidia's most advanced chips or ASML's EUV machines.
Huawei chips are also still behind Nvidia's most advanced technology in many areas. Analysts say training cutting-edge AI models such as DeepSeek still relies on Nvidia chips.
On the other hand, Huawei continues to pursue. DeepSeek said that the AI V4 model launched in April has been adapted for Huawei's Ascend chips. Paul Triolo of DGA-Albright Stonebridge Group assessed that there was a possibility of a major cooperation between DeepSeek and Huawei to train the next AI model on domestic hardware.
Phelix Lee of Morningstar said Chinese chips could potentially replace Nvidia, though the shift would not happen overnight.
Nvidia previously designed the H20 chip with lower computing capabilities so that it could still be sold to China without violating US restrictions. However, shipments are said to continue to decline.
Beijing's attitude towards H200 imports is unclear. Nvidia said it had not sold H200 in China. In a shareholder meeting, Huang said the company had not received revenue from the chip and was not sure whether imports would be allowed.
Globally, Nvidia is still growing strongly as AI demand surges. The company expects revenue of around $91 billion in May to July, up from nearly $82 billion in the previous quarter, excluding data center computing revenue from China.
Nvidia's latest annual revenue was nearly $216 billion. Huawei recorded $126 billion for the comparable period.
Huawei itself is not only targeting the Chinese market. The company, which is already the world's largest supplier of telecommunications network equipment, operates in 170 countries and regions.
However, China's advanced chip production capacity is still insufficient to meet domestic needs. If capacity increases and prices become more competitive, Counterpoint analyst Brady Wang believes that Chinese chips can seize markets in regions such as Southeast Asia.
According to Wang, China's strategy of pursuing technological independence, then exporting it, is likely to remain unchanged, regardless of whether Nvidia can sell its chips in China again.
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