Nvidia's AI chips collapse in China as Huawei takes over

Introduction: a technological shift confirmed by the numbers

What the raw numbers reveal

Barely three years ago, Nvidia held roughly 95% of China's artificial intelligence chip market, according to founder Jensen Huang's own words as reported by the Associated Press and picked up by the Los Angeles Times. Today, that figure has all but vanished in some segments, as Chinese manufacturer Huawei captures a growing share of the domestic market. Analysis firm Bernstein puts Nvidia's China market share at around 40% in 2025, with a projected drop to just 8% this year.

This reversal is no accident. It stems directly from the export controls imposed by Washington on advanced semiconductors, a national security policy that pushed Beijing to accelerate its pursuit of technological self-sufficiency. Sorting out what is proven from what remains speculation is the point of this fact-check.

Why this story deserves rigorous verification

The narratives circulating about Chinese AI chips often mix solid facts with smuggling rumors, conflicting market-share estimates, and criminal accusations still under investigation. One striking example: Reuters' revelations that Huawei allegedly stockpiled 2 to 3 million chips manufactured by TSMC, obtained through an alleged diversion scheme involving Chinese company Sophgo, already on the American blacklist.

This fact-check separates what is confirmed by primary sources — official statements, analyst reports, court documents — from what remains an unproven allegation. I won't lie to you: in this story, the line between verified fact and plausible theory is sometimes thin, and I'd rather admit that than make the call for you without solid proof.

Claim 1: Nvidia held 95% of the Chinese market before the restrictions

What the primary source says

Jensen Huang confirmed this figure himself in an interview with the Associated Press, picked up by the Los Angeles Times on June 29, 2026: "We were in China for 30 years, and before the export control banned Nvidia from China, we had about 95% market share, so we were in full competition." This statement comes directly from the person at the center of it, which makes it a top-tier source, though it also serves his interests in the debate over easing American restrictions.

Verdict: TRUE, with the caveat that this figure represents a historical average across three decades of commercial presence, not a frozen snapshot in time. The subsequent collapse is likewise widely corroborated by several independent analyst firms.

What follows: is the drop as steep as claimed

According to Bernstein, Nvidia's share fell to around 40% in 2025, and is expected to drop to 8% in 2026. These figures, cited by the Los Angeles Times, apply specifically to the advanced AI chip segment, not the entire Chinese semiconductor market, where Nvidia and AMD still maintain a presence in certain less sensitive segments.

Other data, notably from the firm IDC for the full year 2025, puts Nvidia's share around 55% of a total market of roughly 4 million cards, with domestic Chinese suppliers — led overwhelmingly by Huawei — capturing between 41% and 49%. These discrepancies between firms are not a sign of manipulation: they simply reflect different methodologies and calculation scopes, a classic problem when trying to measure a market as opaque as China's semiconductor sector.

Claim 2: Huawei has overtaken Nvidia in its home market

Huawei's production numbers

According to data compiled by IDC, Huawei reportedly shipped around 812,000 AI accelerators in 2025, close to 49% of Chinese-brand cards and around 20% of the total market — more than every other Chinese supplier combined. The Los Angeles Times confirms that Huawei "now leads domestically" according to analyst Antonia Hmaidi, who states plainly that "Nvidia has definitely lost significant ground to Huawei."

The flagship product behind this breakthrough is the Ascend 950 series, seen by several industry analysts as comparable, in certain respects, to Nvidia's H200 — one of the most powerful chips in the American lineup. Analyst Phelix Lee tempers that view, however: "We don't expect an abrupt shift toward Ascend," noting that demand still outstrips available supply in China, according to analyst Rui Ma.

Verdict on this claim

The verdict is largely true with caveats. Huawei has indeed overtaken or matched Nvidia in several segments of the domestic Chinese market, but the transition is neither complete nor instantaneous. Major Chinese tech companies and universities still want chips like the H200, partly for research purposes, which fuels a parallel market for circumventing the restrictions.

He Tingbo, a technical leader at Huawei, sums up the moment's ambivalence: "We've found pretty good solutions." But she also admits to lingering uncertainty: "Who can move faster? Huawei or other companies? I don't know the answer. I think only time will tell." That honesty from a Huawei executive deserves to be highlighted: even the architects of this Chinese rise acknowledge the technological uncertainty that remains, and I find it refreshing that she doesn't give in to easy propaganda.

Claim 3: Huawei allegedly stockpiled 2 to 3 million TSMC chips illegally via Sophgo

What the investigations reveal

This claim, featured at the top of this story, comes from a broader investigation into attempts to circumvent American restrictions. The U.S. Commerce Department has opened an investigation into TSMC, the Taiwanese semiconductor manufacturing giant, to determine whether chips destined for Chinese company Sophgo — itself on the blacklist — ended up in Huawei's Ascend 910B AI processor. According to information relayed by Reuters, TSMC could face a fine exceeding a billion dollars if the accusations are confirmed.

TSMC categorically denies any direct shipments to Huawei since September 2020, when American restrictions first took effect against the Chinese company. Because the semiconductor supply chain is global and complex, tracing the exact origin of each chip back to its end user is painstaking investigative work, often spanning several years.

What this fact-check can and cannot confirm

The verdict here is partially verifiable, investigation ongoing. The existence of a Commerce Department investigation is confirmed by reliable journalistic sources. The precise figure of "2 to 3 million chips" cited in some press summaries has not been independently confirmed by an official primary source at the time of writing, and I refuse to present it as an established fact until a court document or government statement formally corroborates it.

This is exactly the kind of nuance I need to own as a columnist: reporting that an accusation exists and circulates in the trade press is one thing, claiming it's proven is another. Reasonable doubt protects the credibility of this entire story, and I'd rather be cautious than sensational.

Claim 4: American restrictions have cost Nvidia itself dearly

The losses in numbers

Nvidia recorded an inventory and development loss of $5.5 billion directly tied to the export restrictions, a figure confirmed by several financial analyses, notably reported by Yahoo Finance. The American giant had designed its H20 chips, a version with reduced computing power, specifically to keep selling in China without violating American restrictions. Those shipments were already declining steadily last year.

As for the H200, its situation remains ambiguous: at a recent shareholder meeting, Jensen Huang admitted the product has "generated no revenue yet, and we don't know if imports will be allowed into the country." Beijing maintains strategic ambiguity on this issue, which complicates any reliable forecast for Nvidia.

The scale of the shock to China's tech ecosystem

China's cyberspace administration reportedly ordered domestic giants like ByteDance and Alibaba to completely halt their Nvidia chip purchases, a measure reported in September 2025 that shows Beijing's determination to accelerate self-sufficiency at any cost. Researcher Paul Triolo even points to a "significant collaborative effort between DeepSeek and Huawei" to train future AI models on domestic hardware — DeepSeek has confirmed that its V4 model, launched in April, was adapted for Huawei's advanced Ascend chips.

The overall verdict on this dynamic: largely confirmed. Nvidia's financial losses and China's accelerating self-sufficiency are two sides of the same coin, documented by consistent financial and journalistic sources.

Claim 5: China no longer depends on anyone for its AI chips

What the reality of the supply chain reveals

This is where the Chinese narrative of "total technological victory" falls apart under scrutiny. The advanced semiconductor supply chain remains deeply global, and no country today can manufacture a cutting-edge AI chip entirely on its own. Nvidia itself depends on the extreme ultraviolet lithography machines made by Dutch company ASML, which in turn rely on American components and technology. TSMC uses these machines to produce most of Nvidia's advanced chips in its Taiwanese factories.

China remains formally barred from buying Nvidia's most powerful AI chips and ASML's EUV lithography machines. This structural dependency means that even Huawei's rapid gains partly rely on older-generation Chinese semiconductors, technologically less advanced than their most recent Western equivalents.

What the West should take away from this story

Analyst Wang, cited by Counterpoint, sums up the real trajectory: "China's strategy of pursuing technological self-sufficiency — and eventually exporting its technology — likely won't change, whether or not Nvidia can sell its chips in China." That's a clear warning: even if Washington tightened the screws further, Beijing would keep investing massively in its technological independence, with the eventual ambition of exporting these solutions to other markets, particularly in Southeast Asia.

Here is where I state my judgment as a columnist plainly: the West cannot afford to win a communications battle while losing the industrial war. Every year Huawei closes the gap is a year in which America's strategic advantage in artificial intelligence shrinks, and pretending otherwise would be denial.

Claim 6: chip smugglers prove Chinese demand remains insatiable

What recent smuggling cases show

Several recent court cases in the United States have exposed organized networks smuggling Nvidia chips into China, circumventing export restrictions through third countries in Southeast Asia. The Los Angeles Times notes that "several recent cases tied to smuggling Nvidia's AI chips into China show the appetite for its technology," an appetite that directly contradicts the narrative of a fully self-sufficient China indifferent to American products.

This reality creates an interesting tension in the debate: if China no longer needed American chips, why would entire networks risk criminal prosecution to keep smuggling them in illegally? The answer comes down to one word: performance. Huawei's best chips, however impressive, still don't match Nvidia's most advanced products for certain large-model training workloads.

The verdict on this claim

The verdict is true and documented. The court cases and customs seizures reported by several American outlets confirm the existence of an active parallel market. This does not contradict Huawei's rise, but it does nuance the idea of a total, definitive shift toward domestic Chinese solutions.

Claim 7: this chip war will reshape the global geopolitical balance

The stakes beyond semiconductor trade

Beyond the sales figures, this technological rivalry fits into a broader geopolitical contest between the United States and China, alongside other strategic rivals of the West like Russia, Iran, and North Korea. The ability to produce and deploy cutting-edge AI chips will determine who dominates future autonomous military systems, mass surveillance capabilities, and major scientific breakthroughs in the decades ahead.

The global AI chip market is expected to reach roughly $67 billion by 2030, according to projections cited by several specialized analysts, which explains the intensity of the financial and strategic stakes behind every percentage point of market share won or lost by Nvidia and Huawei.

What the West must do to avoid losing this race

Western governments must choose between two approaches: maintaining strict restrictions that paradoxically accelerate Chinese self-sufficiency, or easing certain exports to retain commercial influence over the Chinese tech ecosystem while curbing its most dangerous applications. Neither option is perfect, and decision-makers in Washington will need to choose with a long-term vision rather than according to electoral cycles.

I'll say it plainly: China doesn't need to win this battle quickly, it just needs to never give up the race. That's where the West, with its four-year political cycle, must prove it can sustain a coherent industrial and strategic effort over an entire decade, not just the length of a presidential term.

Conclusion: the overall verdict on this story

What's confirmed, what remains uncertain

At the end of this verification, several central elements of the narrative are confirmed by multiple credible sources: Nvidia's dramatic loss of market share in China, Huawei's rapid rise with its Ascend series, and the concrete financial losses suffered by the American giant. Other elements, notably the exact scale of the alleged diversion scheme via Sophgo and TSMC, remain under investigation and deserve to be followed cautiously in the coming weeks.

This story illustrates a broader reality: the technological rivalry between Washington and Beijing will not be settled in a single quarter. It plays out over years, through restrictions, workarounds, forced innovation, and financial losses shared by both sides.

Why this battle goes beyond a simple commercial issue

Supremacy in artificial intelligence isn't just a matter of profits for Nvidia or national pride for China. It's a matter of security, future military power, and global technological leadership for decades to come. The West must choose between a coherent long-term restriction policy and the temptation to give in short-term to pressure from financial markets demanding renewed access to the Chinese market for American companies.

This fact-check is not meant to settle that political debate, but to give readers the verified facts they need to form an informed opinion, without giving in to either American triumphalism or Chinese propaganda.

By Maxime Marquette, columnist

Columnist's transparency note

Who I am and my acknowledged biases

I am a columnist and analyst, not an investigative journalist on the ground. My editorial position is clearly pro-Western, and I view China as a major strategic threat to the current international order. This acknowledged bias colors my interpretation of the facts, but I make every effort never to distort the numbers themselves to support that thesis.

I am not a semiconductor engineer or a specialist in the global chip supply chain. The technical assessments presented here rely on analyses from experts cited by recognized outlets, not on my personal expertise. Where uncertainty persists, notably regarding the diversion accusations via Sophgo, I have flagged it explicitly rather than making a call.

My method for this fact-check

I cross-referenced Jensen Huang's direct statements, estimates from several independent analyst firms (Bernstein, IDC, Counterpoint), and investigative reporting on the ongoing legal accusations. Each claim received its own distinct verdict rather than a blanket judgment, because this story mixes solid facts with allegations still under investigation.

No invention, no fabricated testimony. I never had access to confidential documents or internal sources at Nvidia, Huawei, or TSMC — everything here comes from public statements and verifiable reporting, with full links listed below.

Sources

Primary sources

Los Angeles Times — Nvidia's AI chip sales in China stall as local chipmakers like Huawei take lead — June 29, 2026

The Wire China — Nvidia uses the specter of Huawei to make its chip exports case — July 2, 2026

Reuters — Artificial Intelligence coverage — July 2026

Secondary sources

News.net — Nvidia's AI chip sales in China stall as local chipmakers like Huawei take the lead — June 2026

South China Morning Post — Nvidia coverage — July 2026

South China Morning Post — Big Tech coverage — July 2026

Tom's Hardware — Huawei could seize China's AI chip crown in 2026 — May 1, 2026