Nvidia's dominance in China's artificial intelligence chip market has taken a significant hit in the first half of 2026, as Huawei and other local competitors gain ground. According to a report from IDC cited by Reuters, Nvidia shipped 678,000 AI data center chips in China during this period, marking a 44% decline from the same period a year ago. This drop in shipments has reduced Nvidia's market share to 34%, down from a higher percentage in previous years.
The decline in Nvidia's market share is primarily attributed to U.S. export controls that restrict the company from selling its most advanced AI chips to China. Additionally, Chinese authorities have shown limited interest in the smaller pool of chips that the U.S. has approved for sale. This regulatory environment has created an opening for domestic players to expand their market presence.
Huawei, in particular, has capitalized on this situation, emerging as the largest AI chip supplier among Chinese developers with a 28% market share. Other local competitors, including T-Head (7%), Cambricon (5%), Kunlunxin (4%), and Hygon (3%), are also producing more advanced chips, further challenging Nvidia's position in the market.
The surge in demand for AI chips in recent years, driven by efforts from both U.S. and Chinese companies to develop advanced AI models, has intensified competition. As local firms continue to innovate and produce competing products, Nvidia's share of the Chinese AI chip market is likely to face further pressure.