Nvidia sees sales of AI chips in China stagnate while Huawei advances with force

Sales of Nvidia artificial intelligence chips in China are stagnant, while local competitors like Huawei quickly gain space. The technological dispute between the United States and China in the semiconductor sector is intensified, with Chinese companies taking the lead in the domestic market for AI chips.

Why do Nvidia's AI chip sales in China fall?

The export restrictions imposed by the US government limit the sale of advanced Nvidia chips to Chinese customers. The company had to create reduced versions of its processors to meet the rules, but still faces resistance from Beijing and local companies that prefer national solutions. According to AP News, Nvidia’s participation in the Chinese semiconductor market for AI has fallen significantly in the last quarters.

Huawei advances in AI chips while Nvidia stagnant

Huawei, which has already been the subject of US sanctions, has developed its own AI chips, such as the Ascend series, capable of competing with Nvidia's performing data centers. With Chinese government support and preference for local suppliers, Huawei has won contracts with technology companies and cloud providers in the country. The company also benefits from the "national substitution" movement that encourages the use of Chinese technology in strategic sectors.

Global impact on the AI chip dispute

The loss of Nvidia's participation in China can accelerate the fragmentation of the global market for AI chips. While the US is trying to contain Chinese technological advancement with sanctions, Beijing's response is to strengthen its own industry. This scenario can lead to a dual ecosystem, with separate supply patterns and chains — which impact from Brazilian startups that depend on imported hardware to large international hyperscalers. In a recent article, we discussed the self-evolution of AI and how Nvidia is also at the forefront of debates on general artificial intelligence.

Nvidia's strategy in the face of Huawei's rise in AI

Nvidia tries to circumvent restrictions with modified chips such as the H800 series, but these products face performance limitations and are still subject to new rules. The company also invests in partnerships with Chinese manufacturers to assemble some components, but the margin of manoeuvre is small in the face of geopolitical pressure.

Frequently Asked Questions about AI Chips in China

Do Huawei chips really replace Nvidia?

Yes, in many cases. Huawei's Ascend 910B chips deliver performance comparable to Nvidia's A100 series for AI model training, although with less mature software ecosystem.

Can Nvidia lose the Chinese market permanently?

Possibly. If restrictions continue and Huawei maintains the pace of innovation, Nvidia can be restricted to a small slice of the Chinese market, focused on niches where its software is indispensable.

Does this affect the price of AI chips in Brazil?

Indirectly, yes. Market fragmentation can increase the overall costs of R&D and logistics, which tends to be passed on to final consumers, including Brazilian companies that buy AI hardware.