Nvidia’s dominance in the Chinese artificial intelligence hardware market is rapidly eroding, with analysts forecasting a catastrophic decline in market share by the end of the year. The shift highlights the profound and perhaps irreversible impact of United States export controls, which have inadvertently accelerated China’s drive for semiconductor self-sufficiency and empowered domestic champions like Huawei. For enterprise technology buyers and supply chain leaders, the changing landscape signals a permanent bifurcation of the global AI infrastructure market.
According to a report by Fast Company and the Associated Press, citing data from global equity research firm Bernstein, Nvidia held roughly 40 percent of China’s AI chip market in 2025, operating neck-and-neck with Huawei. However, Bernstein projects that by the end of 2026, Nvidia’s share will collapse to approximately 8 percent, while Huawei’s share will surge to around 50 percent.
This dramatic realignment is the compounded result of tightening US restrictions and Beijing’s aggressive mandate to procure domestically designed silicon.
Nvidia CEO Jensen Huang recently acknowledged the severity of the situation. In an interview with the Associated Press, Huang noted that before the export controls were implemented, Nvidia commanded about 95 percent of the Chinese market. He framed the ongoing dilemma plainly, stating that the US must balance national security protections with the need to “simultaneously… go and compete and grow our technology industry and maximize our exports.”
The Ascend 950 Closes the Performance Gap
The rapid market share shift is driven in large part by the increasing capability of Chinese domestic hardware. Huawei’s Ascend 950 series chips are now viewed by industry analysts as roughly comparable to Nvidia’s H200, long considered one of the American firm’s most capable commercial products. Huawei has also demonstrated the ability to deploy large-scale AI computing clusters combining thousands of chips, a complex networking capability that previously set Western companies apart.
Antonia Hmaidi of the Mercator Institute for China Studies told the Associated Press that Nvidia “has definitely lost significant ground to Huawei, which (now) leads domestically.” This sentiment is echoed by He Hui, director of semiconductor research at Omdia, who noted that “China now believes in its own self-sufficiency and supply capabilities.” Once this confidence takes root within the procurement departments of Chinese enterprises and state institutions, it becomes exceedingly difficult to reverse, even if export restrictions were to ease.
The transition to domestic hardware is not without friction. Chinese tech giants have scrambled to secure allocations of Huawei’s Ascend chips, leading to significant supply bottlenecks. Rui Ma, founder of Tech Buzz China, noted that demand still far exceeds available supply inside China when it comes to AI chips. This supply-demand imbalance underscores the massive scale of China’s AI infrastructure buildout and the immense pressure on domestic foundries to scale production rapidly.
The Limits of Export Controls
While Nvidia’s market share is plummeting, its technology remains vital for the most advanced applications. Cutting-edge AI development inside China, including the training of massive frontier models, still relies heavily on Nvidia hardware. The continued demand is evidenced by several documented cases of Nvidia chips being smuggled into China to circumvent export controls, illustrating that the appetite for the absolute highest-performance silicon has not disappeared, merely been constrained.
Nvidia attempted to maintain its foothold in China by engineering compliance chips, such as the H20 series, which stripped down computing power to meet US regulatory thresholds. However, up to last year, shipments of these compliance chips were gradually declining, according to Brady Wang, an analyst with Counterpoint Research.
Beijing’s public stance on the importation of newer models like the H200 remains unclear, and Huang recently stated that the company is “uncertain whether any imports will be allowed into the country.”
The situation highlights the fundamental limitation of the US export control strategy. By cutting off access to its best technology, Washington forced Chinese companies to invest heavily in alternatives. As China’s domestic chipmakers seize larger portions of the local AI market, they generate the revenue necessary to fund subsequent generations of research and development, creating a self-sustaining cycle of innovation that operates entirely outside US influence.
A Bifurcated Global Market
The collapse of Nvidia’s market share in China marks the definitive splitting of the global AI chip market into distinct, geopolitically aligned supply ecosystems. Enterprise buyers with operations in both markets now face significant infrastructure complexity: the vendor stack that works seamlessly in North America or Europe may be unavailable, unsupported, or politically untenable in China, and vice versa.
For CIOs and supply chain technology leaders, vendor concentration risk has moved from a theoretical concern to a documented reality. Organizations that previously assumed a single global AI chip strategy could serve all geographies must now navigate a fragmented landscape where Huawei’s Ascend clusters and Nvidia’s GPU platforms are not interchangeable. This requires managing dual technology stacks, separate software optimization pipelines, and distinct procurement strategies.
Looking ahead, the critical variable is China’s domestic manufacturing capacity. Huawei has not publicly confirmed full-year production volumes for the Ascend 950, and capacity constraints at domestic foundries remain a significant hurdle.
How quickly China can scale its advanced packaging and manufacturing capabilities will determine whether Bernstein’s 8 percent floor for Nvidia holds, or if the American giant’s presence in the Chinese market shrinks even further.