From Dominance to Zero: How Huawei Took Over China's AI Chip Market

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Nvidia's Fall from Grace

The numbers tell a stark story. Not long ago, Nvidia held roughly 95 percent of China's market for advanced artificial intelligence chips. Today, Nvidia CEO Jensen Huang has publicly acknowledged that this share has collapsed to essentially zero. The U.S. government's export control policy, intended to prevent China from accessing technology with potential military applications, has effectively pushed Nvidia out of one of the world's largest and fastest-growing AI markets.

The irony was on full display earlier this year, when Huang visited Beijing during a diplomatic summit between President Donald Trump and Chinese leader Xi Jinping. Crowds mobbed him on the streets. His celebrity status in China remains intact — but his company's ability to sell there has been cut off at the knees.

Huang himself has been candid about the consequences: "Conceding an entire market the size of China probably does not make a lot of strategic sense. I think that has already largely backfired," he said publicly.

Huawei Steps Into the Gap

The main beneficiary of Nvidia's exit is Huawei, the Chinese telecommunications and technology giant that has been under U.S. sanctions since 2019. Blocked from buying the world's most advanced chips, Huawei redirected enormous resources into building its own.

The result is the Ascend chip series, now in its 950-generation. The Ascend 950PR, which entered mass production in March 2026, delivers up to two petaflops (a measure of computing speed) of AI performance and comes with 128 gigabytes of locally produced high-bandwidth memory. Analysts place its overall capability somewhere between Nvidia's H100 and H200 — both of which China is banned from importing.

Huawei's AI chip revenue is projected to reach 12 billion dollars in 2026, a 60 percent increase from 7.5 billion dollars the previous year. The company is on track to control around 60 percent of China's AI chip market by year's end. Major Chinese technology firms including Alibaba, ByteDance, and Tencent are already among Huawei's procurement customers.

DeepSeek Cements the Shift

Perhaps the clearest signal of how deeply the landscape has changed came from DeepSeek, the Chinese AI startup whose low-cost, high-performance models made international headlines earlier this year. DeepSeek gave Huawei early optimization access for its latest model, but did not extend the same to Nvidia or AMD. Its own infrastructure now runs on Huawei's Ascend hardware.

Huawei has also unveiled an ambitious multi-year chip roadmap, with the Ascend 950DT scheduled for the end of 2026, followed by the Ascend 960 in late 2027 and the Ascend 970 in late 2028. All chips in the lineup will come with Huawei-designed memory modules, reducing dependence on foreign suppliers.

The Limits of China's Chip Ambitions

Despite the rapid progress, Huawei's chips still face real limitations. The Ascend 950PR is manufactured by SMIC (Semiconductor Manufacturing International Corporation), China's leading chipmaker, using a process roughly equivalent to a 7-nanometer node — but without the extreme ultraviolet (EUV) lithography machines that leading-edge fabs like Taiwan's TSMC rely on.

Industry sources estimate SMIC's production yields for the 950PR at around 50 to 60 percent, compared to TSMC's typical 80 to 90 percent for chips of comparable complexity. Lower yields mean fewer usable chips per production run, which drives up costs and limits how quickly supply can scale.

A report from the Council on Foreign Relations estimates that by 2027, the best U.S. AI chips could be more than 17 times more powerful than Huawei's top offerings. For the most demanding AI training workloads, Chinese developers — including DeepSeek in its research operations — still quietly rely on Nvidia hardware where it can be obtained. Several smuggling cases involving Nvidia chips have surfaced in recent months, underlining the persistent demand.

A Market Split in Two

What is emerging is less a clean handover and more a permanent division. American AI infrastructure continues to run on Nvidia. Chinese AI infrastructure is being rebuilt around Huawei. Two separate ecosystems — with different hardware, different software layers, and different optimization patterns — are now developing in parallel.

Morgan Stanley estimates China's domestic AI chip market could reach 67 billion dollars by 2030. Huawei is not just filling a gap — it is building the foundation for what Beijing hopes will become a self-sufficient, exportable technology stack.

Nvidia, meanwhile, is not standing still. The company continues to expand globally, with projected quarterly revenues of around 91 billion dollars. But the loss of the Chinese market — once worth over 20 billion dollars annually — is a permanent reminder of how quickly geopolitical decisions can reshape entire industries.

Outlook

The trajectory is clear: Huawei will dominate China's AI chip market for the foreseeable future, backed by state support, a captive customer base, and a roadmap that stretches through the end of the decade. Whether it can eventually challenge Nvidia in third-country markets — particularly in Southeast Asia — remains an open question.

What is no longer in question is that China's bet on technological self-sufficiency in semiconductors, accelerated by years of American export controls, has produced a genuine domestic champion. U.S. policymakers who hoped to slow China's AI development may have instead accelerated the very outcome they were trying to prevent.

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Sources:

1. Associated Press – Nvidia's AI chip sales in China stall, as local chipmakers like Huawei take the lead: https://apnews.com/article/ai-chips-nvidia-huawei-china-1ae6228c4928ddbb43f984e9b38f49dd
2. Tom's Hardware – Huawei braces for $12 billion in AI chip revenue: https://www.tomshardware.com/tech-industry/huawei-expects-12-billion-in-ai-chip-revenue-this-year-as-nvidias-china-market-share-hits-zero
3. Tom's Hardware – Huawei's AI capabilities vs. Nvidia (CFR report): https://www.tomshardware.com/tech-industry/semiconductors/huawei-still-cant-match-nvidia-on-ai-chips-says-cfr-report
4. Fortune – Huawei reveals Ascend AI chip roadmap: https://fortune.com/asia/2025/09/18/huawei-china-ascend-ai-chips-nvidia/

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