Nvidia's China AI-chip share falls as Huawei closes gap, report finds

Nvidia's dominance in China's AI-chip market has waned, with its share declining to 34% in the first half of 2026, according to an IDC report. This decline follows a 44% year-over-year drop in Nvidia's shipments of AI accelerators in China, which totaled 678,000 units during the period. The report highlights the impact of US export restrictions on Nvidia's ability to supply its advanced chips to China, creating an opening for domestic competitors like Huawei to expand their market presence.

Huawei has capitalized on the restrictions placed on Nvidia's products, gaining significant traction in China's AI-chip market. The report indicates that Huawei shipped 572,000 AI chips in the first half of 2026, securing a 28% market share. This growth underscores the effectiveness of Beijing's domestic substitution policy, which aims to reduce reliance on foreign technology and bolster local semiconductor manufacturers.

The decline in Nvidia's shipments to China is part of a broader trend in which non-GPU chips have begun to outpace GPUs in terms of volume. Chinese suppliers have expanded their sales of alternative chip technologies, further challenging Nvidia's position in the market. This shift reflects the growing influence of domestic companies and the impact of US export controls on the availability of advanced chips in China.

The shrinking market share of Nvidia in China has significant implications for the global semiconductor industry. Companies relying on Nvidia's AI chips may face increased costs and potential supply chain disruptions as they seek alternatives. The situation also raises concerns about vendor lock-in and the long-term viability of relying on a single supplier for critical components. Market reactions suggest that the competition between Nvidia and Huawei is intensifying, with broader consequences for the AI chip landscape.

As the competition between Nvidia and Huawei intensifies, the broader implications for the AI chip industry are becoming more pronounced. The shift in market dynamics highlights the growing importance of domestic semiconductor production in China and the challenges faced by foreign companies operating under US export restrictions. The situation remains fluid, with ongoing developments likely to shape the future of AI chip manufacturing and supply chains globally.