Nvidia concedes Chinese AI chip market as Huawei gains dominance

Thursday 21 May 2026 - 07:02

By: Dakir Madiha

Nvidia concedes Chinese AI chip market as Huawei gains dominance

Nvidia chief executive Jensen Huang said the company has effectively surrendered the Chinese artificial intelligence chip market to Huawei as US export controls continue to prevent major sales of advanced processors to Chinese firms.

The remarks came as Nvidia reported record first quarter revenue of $81.6 billion for fiscal year 2027, marking a 20% increase from the previous quarter. Huang said Huawei had completed a record year and was positioned for further growth as Chinese demand for AI infrastructure continued to expand. He also stated that Nvidia no longer expected Washington to authorize a meaningful return of advanced chip exports to China.

Huang said the company had advised investors not to expect approvals that would allow Nvidia to resume large-scale sales in China. Nvidia has continued to exclude Chinese revenue from its financial forecasts. Earlier in May, Huang said Nvidia’s market share in China had effectively fallen to zero because of tightening restrictions on semiconductor exports.

The shift reflects a broader geopolitical dispute over advanced technology and AI leadership between the United States and China. Chinese technology groups including ByteDance, Alibaba and Tencent had previously received approval from Chinese authorities to acquire more than 400,000 Nvidia H200 chips. Several Chinese companies, including JD.com, also reportedly secured authorization from the US Commerce Department to purchase H200 processors during May 2026.

Despite those approvals, no shipments were completed. US Commerce Secretary Howard Lutnick told senators that the Chinese government had not allowed companies to finalize the purchases because Beijing wanted to prioritize domestic semiconductor producers. Chinese authorities also suggested that companies buying foreign AI chips could be required to purchase domestic alternatives alongside them.

Nvidia halted production of the H200 chip in March and redirected Taiwan Semiconductor Manufacturing Company capacity toward its next generation Vera Rubin platform. The policy environment surrounding AI chip exports has also shifted repeatedly since late 2025. President Donald Trump announced in December that Nvidia could resume limited H200 sales to China, but the Commerce Department later imposed a 25% tariff, export volume limits and end-use certification rules.

The uncertainty triggered resistance in Congress, where bipartisan lawmakers proposed legislation that would allow elected officials to block advanced chip exports to countries considered strategic rivals. As US restrictions intensified, Huawei accelerated its expansion in China’s AI semiconductor market. Morgan Stanley estimates the company could control 60% of the Chinese AI chip sector by the end of 2026. Huang acknowledged Huawei’s growing influence directly, describing the company as extremely strong.