NVIDIA on the decline in China: Market share halved – Huawei moves up

The mood is tense – not because of a botched GPU presentation, but because NVIDIA is noticeably losing ground in China. At a Computex conference, CEO Jensen Huang revealed that the company’s market share in the Chinese AI market has fallen from 95% to only around 50%. According to Huang, this is mainly due to the strict US export restrictions that were introduced under the Biden administration and have recently been tightened.

Export ban with side effects

What originally began as a measure to curb the transfer of technology to so-called “hostile states” is now turning into a shot in the arm – at least from the perspective of the US companies affected. NVIDIA was once a virtual monopolist in China’s fast-growing AI sector. However, since the high-end accelerators of the H and A series – such as the H100 and A100 – fell victim to export regulations, many Chinese companies have had to rethink their approach. The result: migration to domestic alternatives and a rapid loss of market share for the Californian chip giant.

Huawei exploits the gap

Huawei in particular seems to be benefiting from the situation. With its own Ascend chips, in particular the Ascend 910B and the new 910C, the company is increasingly positioning itself as a serious competitor. The chips, which are primarily used for inference workloads, are already widely used by technology groups such as Baidu, ByteDance and Tencent, according to reports. Huawei is also following suit at infrastructure level: The new “CloudMatrix 384” rack system is in direct competition with NVIDIA’s recently announced Blackwell GB200 NVL72 configuration.

A 50 billion dollar question mark

Huang put the market potential in China at around 50 billion US dollars – an amount that now seems to be increasingly flowing towards domestic manufacturers. While the CEO surprisingly classifies former President Trump’s export policy as “trend-setting”, he also hints that the current course under Biden could push NVIDIA completely out of the Chinese market in the long term. Particularly explosive: Huang warned that China could develop its own AI ecosystem if its export policy continues – and thus challenge the technological supremacy of the USA.

Politically motivated deindustrialization?

The restrictive US policy is not only a geopolitical signal, but also has tangible economic consequences. NVIDIA, which has traditionally relied heavily on business in China, is now under pressure to open up alternative sales markets or develop adapted products for the Chinese market. One example: the “B40”, an apparently softened version of the H100, is still to be exported to China in large quantities – rumored to be one million units – in 2025. Whether the slimmed-down accelerator can compete on equal terms with Huawei’s chips, however, remains questionable.

Systemic power shift underway

In any case, there seems to be no stopping China’s technological rise. Although Huawei is still lagging behind in pure manufacturing processes – particularly due to the lack of modern EUV lithography – the company has made considerable progress in system integration, software and inference architectures in recent years. Unlike in the consumer business, this shows how quickly a market can tip when regulatory measures readjust the balance of power. While NVIDIA is preparing for the new Blackwell architecture in Western markets, the company is threatened with a silent loss of power in Asia. The withdrawal from China is not voluntary, but a result of political coercion. The fact that Huawei and other Chinese providers were able to close the resulting gap within a few years raises questions about the effectiveness and foresight of the US strategy. If this development continues, the Chinese market is likely to become a strategic side note for NVIDIA in the medium term – and that would not only be an economic turning point, but also a symbol of a changing technological world order.

Source: Reuters