Nvidia’s AI chip market share in China declined sharply during the first half of 2026, as US export restrictions and growing competition from Huawei weakened the American semiconductor giant’s position.
According to a Reuters report published Tuesday, citing research from IDC, Nvidia shipped approximately 678,000 artificial intelligence data center chips to China during the six months ending in June.
That represented a 44% decline compared with the same period a year earlier. Consequently, Nvidia’s share of China’s AI chip market fell to 34%, highlighting the growing challenges facing the company in one of the world’s largest technology markets.
US Export Restrictions Weigh on Nvidia’s China Sales
Washington’s continued restrictions on advanced semiconductor exports played a major role in Nvidia’s declining market share.
US authorities have prevented the company from selling its most powerful AI processors to Chinese customers, limiting access to critical technology used in artificial intelligence development.
Although Washington approved certain lower-performance chips for export, Chinese authorities permitted only limited domestic sales of those products.
These restrictions have reduced Nvidia’s ability to compete effectively in China, creating opportunities for domestic semiconductor manufacturers to expand their presence.
Huawei Gains Ground in China’s AI Chip Market
Huawei has emerged as Nvidia’s strongest domestic competitor, benefiting from China’s efforts to develop alternatives to American semiconductor technology.
According to the IDC figures cited by Reuters, Huawei captured 28% of China’s AI chip market, making it the leading Chinese manufacturer in the sector.
The company has accelerated development of its own artificial intelligence processors, aiming to provide competitive solutions for domestic technology companies and data centers.
Other Chinese semiconductor developers are also making progress as the country works to strengthen its technological independence.
Alibaba’s chip design division, T-Head, secured a 7% market share, while Cambricon accounted for 5%.
Meanwhile, Baidu’s Kunlunxin captured 4% of the market, followed by Hygon with a 3% share.
Together, these companies are creating an increasingly competitive environment for Nvidia, particularly as restrictions on US semiconductor exports continue.
China’s AI Chip Industry Benefits From Growing Domestic Demand
Demand for artificial intelligence processors has expanded rapidly in recent years, driven by increased investment in developing and training advanced AI models.
Technology companies in both the United States and China have committed substantial resources to artificial intelligence infrastructure, supporting demand for powerful computing chips.
However, restrictions on access to US technology have also encouraged Chinese businesses to accelerate the development of domestic alternatives.
Huawei and other local semiconductor manufacturers are seeking to capitalize on this demand by improving chip performance and expanding production capabilities.
Nvidia Faces Increasing Competition in a Strategic Market
Despite retaining a 34% share of China’s AI chip market, Nvidia faces mounting competitive pressure as domestic manufacturers strengthen their technological capabilities.
Huawei’s 28% market share demonstrates how quickly Chinese semiconductor companies are narrowing the gap with established international competitors.
The evolving competitive landscape also reflects the broader impact of US-China technology tensions on the global semiconductor industry.
As demand for artificial intelligence computing continues to grow, Nvidia’s ability to maintain its position in China will depend partly on future export regulations and the pace of technological progress among domestic rivals.
