U.S. restrictions on AI-chip exports serve to China's advantage.
In the tech arena, the ongoing tussle between powerhouses Nvidia and Huawei in the Chinese chip market is heating up due to a series of US export restrictions. Competitor, Counterpoint Research's Deputy Director, Brady Wang, shared his thoughts on the matter, suggesting that local Chinese firms like Huawei and Cambricon have better incentives to advance their technology, given China's array of chip producers.
With Huawei's Ascend chips gaining popularity in China, resulting from Nvidia's H20 graphics processor restrictions, analysts such as Doug O'Loughlin from SemiAnalysis concur with Brady. The US export bans on Nvidia chips to China have been enforced since 2022, with the primary aim of blocking advanced chip technology from reaching Chinese companies[1]. As a result, Nvidia introduced H800 chips for China, only to face another ban in 2023, forcing the company to lower its offerings to less powerful H20 chips[1].
Reports have indicated that the Trump administration restricted the export of these processors without a license in April 2025, with Nvidia anticipating a staggering $5.5 billion in quarterly losses[1]. Despite these challenges, China remains a significant market for Nvidia, even ranking fourth in sales after the US, Singapore, and Taiwan[2].
In 2024, China accounted for about 17% of Nvidia's total revenue, a decline from the 26% recorded in 2022[2]. Meanwhile, Huawei continues to set its sights on expanding its share of the AI chip market in China, positioning itself as a formidable rival to Nvidia[3]. Chinese companies like Tencent, Alibaba, and ByteDance may shift towards domestic providers, such as Huawei, further eroding Nvidia's market share[3].
China's push for self-reliance and reduced reliance on foreign technologies is driving the growth of local chip manufacturers, with SMIC (Semiconductor Manufacturing International Corporation) being a prime example[1]. However, global leaders in advanced chip production still outpace SMIC[1]. As the landscape continues to evolve, the Chinese chip market could witness significant change, with Chinese companies relying heavily on local producers[1].
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[Note 1: While most recent data points to 2025 developments, the trends discussed reflect ongoing shifts from previous years, including Nvidia's market share decline and China's growing reliance on domestic chip producers.]
[Note 2: Projections suggest that China's share of Nvidia's revenue could drop further to approximately 13% by the end of 2025.]
[Note 3: The Financial Times reported Huawei's aim to increase its share of the AI chip market in China in January 2024.]
- Despite US export restrictions on Nvidia chips to China, Huawei, aided by incentives in China's array of chip producers, is increasingly popular with their Ascend chips in the Chinese market due to Nvidia's H20 graphics processor restrictions.
- In a semianalysis of the tech industry, Doug O'Loughlin from SemiAnalysis has concurred with Brady Wang, Deputy Director of Competitor, Counterpoint Research, on the ongoing tussle between Nvidia and Huawei in the Chinese chip market.
- CNBC reports suggest that China's push for self-reliance in the technology sector has led to the growth of local chip manufacturers, such as SMIC, and a potential decline in Nvidia's market share due to the shift towards domestic chip providers like Huawei.
- As the landscape of the Chinese chip market continues to evolve due to self-reliance initiatives, Chinese companies, including Tencent, Alibaba, and ByteDance, may continue to rely heavily on local producers like Huawei, impacting Nvidia's overall market position.
