Nvidia’s China AI Chip Share Falls as Huawei Narrows the Gap

BEIJING — Nvidia's share of China's data-center artificial intelligence chip market fell sharply in the first half of 2026, as US export restrictions limited the supply of its products and domestic competitors, led by Huawei, expanded their presence, according to market research data reported by Reuters on Tuesday.

Nvidia held 34% of the market from January through June, down from its previous position as the dominant supplier, according to an IDC report reviewed by Reuters. The company shipped 678,000 AI accelerators in China during the period, a 44% decline from a year earlier.

Huawei emerged as Nvidia's closest domestic challenger. It shipped 572,000 AI accelerators, accounting for 28% of the market. The narrowing gap highlights how US restrictions on advanced semiconductor exports have created opportunities for Chinese suppliers to strengthen their positions in a strategically important industry.

AI accelerators are specialized processors designed to support demanding workloads, including training and running large AI models. They are increasingly important as technology companies, telecommunications operators and government-related organizations expand computing capacity.

Domestic chipmakers gain ground

Huawei is not the only Chinese company benefiting from the shift. Alibaba's T-Head, Cambricon, Baidu's Kunlunxin and Hygon also expanded shipments, according to the data cited by Reuters.

The market is also changing in terms of chip architecture. Total shipments of AI accelerators in China exceeded 2 million units in the first half of the year. Shipments of non-GPU accelerators increased 80%, while traditional GPU shipments declined 26% to 991,000 units.

The figures suggest that Chinese customers are increasingly considering specialized processors designed for particular workloads rather than relying exclusively on conventional graphics processing units. IDC said buyers were paying greater attention to overall system performance, reflecting the importance of integrating chips with software, networking and other computing infrastructure.

Export controls reshape competition

US export controls have restricted Nvidia's ability to supply some of its most advanced products to China. Washington has cited national security concerns in limiting access to high-performance computing technology, while Beijing has encouraged greater reliance on domestic alternatives.

The shift does not necessarily mean that Chinese chipmakers have eliminated the technological gap with leading US suppliers. Performance, software compatibility, manufacturing capacity and the availability of supporting equipment remain important factors in determining whether domestic products can meet the requirements of large-scale AI systems.

Nvidia has also argued that restrictions reduce its access to a major market. The competitive landscape therefore reflects both demand for AI computing and the effects of government policies on cross-border technology sales.

Demand remains a key driver

China's AI sector continues to require substantial computing resources as companies develop models and introduce AI applications. IDC projected that total AI accelerator shipments in China would increase by 19% in 2026, even as GPU shipments were forecast to decline by 9%.

The outlook points to a market in transition rather than a simple replacement of one supplier by another. Nvidia remains a major player, but Chinese manufacturers are gaining ground in a market where procurement decisions are increasingly influenced by availability, policy priorities and the performance of complete computing systems.

The next phase of competition will depend on whether domestic suppliers can continue expanding output while improving software ecosystems and delivering reliable performance at scale. For Nvidia, the challenge will be to compete within a market increasingly shaped by export restrictions and China's push for greater technological self-reliance.