The competition between the United States and China in artificial intelligence (AI) hardware is intensifying, with Chinese companies like Huawei making significant strides in their domestic market, challenging the dominance of US firms such as Nvidia. Despite Nvidia CEO Jensen Huang’s high profile visit to Beijing during the 2017 summit between US President Donald Trump and Chinese leader Xi Jinping, the company has struggled to maintain its once commanding market share in China.

US export controls aimed at limiting China’s access to advanced technology have played a key role in reshaping the competitive landscape. Initially, these restrictions prevented Nvidia from selling its most advanced H200 AI chips to the Chinese market. Although a later relaxation of these controls temporarily allowed some sales, China quickly pivoted to promoting the development and use of domestically produced chips, led by Huawei. Huang acknowledged that Nvidia, which once held approximately 95% of China’s AI chip market, has lost significant ground, conceding the balance now favors Beijing’s domestic chipmakers.

Since 2019, US sanctions targeting Huawei and broader Chinese semiconductor capabilities have spurred China’s semiconductor industry to pursue self-sufficiency. Chinese firms have invested heavily in developing AI chips that compete directly with Nvidia’s offerings. Industry analysts note that Huawei’s Ascend 950 series chips are considered comparable in performance to Nvidia’s H200, highlighting the rapid progress made in Chinese chip design. Research from Bernstein, a global equity firm, suggests Nvidia’s market share in China could fall to around 8% in 2026, while Huawei’s might rise to nearly 50%.

Despite this shift, Nvidia’s technology remains vital for certain applications in China. The global semiconductor supply chain’s complexity means no country can independently produce the most advanced AI chips. Nvidia relies on Dutch manufacturer ASML’s extreme ultraviolet lithography (EUV) machines, which incorporate US technologies, and Taiwan Semiconductor Manufacturing Company (TSMC) for fabrication. China faces restrictions on acquiring both Nvidia’s highest-end chips and the necessary chipmaking equipment. Consequently, advanced AI projects and research institutions in China continue to depend to some extent on Nvidia technology, underscoring persistent demand amidst supply constraints.

Chinese firms like DeepSeek, a rising AI competitor, have adapted their models to run on Huawei chips, pointing toward China's growing domestic capabilities. Nevertheless, industry experts suggest that a complete transition away from Nvidia’s technology is unlikely in the near term, and Beijing’s stance on importing advanced US-made chips remains unclear.

Huawei, already the world’s largest telecom equipment supplier, is expanding its chip sales internationally. While domestic production currently falls short of China’s internal demand for cutting-edge chips, projected improvements in manufacturing capacity and competitive pricing may enable Huawei and other Chinese firms to increase their market share in Southeast Asia and beyond. Analysts contend that China’s commitment to technological self-reliance and ambitions to export its semiconductor technologies will persist independently of US-China trade policies.

In the broader context, Nvidia continues to experience strong global growth, with projected revenues exceeding US$90 billion in the May-July period of 2026, reflecting surging demand for AI hardware. Huawei’s annual revenue trails at around US$126 billion but signals substantial resources being channeled into semiconductor development. The shifting dynamics underscore the ongoing technological race in AI, where geopolitical factors and domestic innovation efforts are reshaping industry leadership.