Nvidia's Dominance Begins to Crumble as China's Tactics Prove Serious
China’s efforts to break free from dependence on advanced US chip technology are beginning to bear real fruit. This simultaneously marks the crumbling of the dominance of the US chip giant Nvidia in one of its key markets essential for its business sustainability.
A report cited from Reuters on Thursday (2/4/2026) states that Chinese GPU and AI chip manufacturers have captured nearly 41% of the AI server accelerator market share in their country. This growth has occurred alongside the Xi Jinping government’s push for state institutions and Chinese companies to adopt domestic chips.
Breaking free from dependence on the US has been a priority for China for several years. This is especially true given the US’s continuous blocking of China’s access to Nvidia’s most advanced chips.
Recently, US President Donald Trump has softened his stance. Nvidia’s H200 chip, the company’s second-most advanced processor, has been permitted for sale to China with certain conditions. However, uncertainty over Trump’s position has led China to continue developing its domestic chip industry.
The total shipment of AI accelerator cards by Nvidia, AMD, and Chinese manufacturers reached around 4 million units in Xi Jinping’s domain, according to data reported by Reuters.
Nvidia remains the market leader, shipping about 2.2 million cards and holding 55% market share. Nevertheless, that share is steadily eroding as Chinese players increasingly take a larger slice of the domestic pie.
AMD has taken only a small portion, shipping 160,000 cards in China, contributing to 4% of the market share.
Meanwhile, Chinese manufacturers collectively have shipped 1.65 million cards, equivalent to 41% of the total domestic market share. This achievement cannot be taken lightly and demonstrates the aggressive efforts of local players to fill the gap as the US government imposes chip export controls on China.
Huawei Technologies has emerged as the leader among other Chinese manufacturers, shipping around 812,000 AI chips. That figure accounts for nearly half of the shipments from domestic producers. Alibaba’s chip design unit, T-Head, claims second place, shipping about 265,000 cards.
Baidu’s Kunlunxin and Cambricon each shipped around 116,000 cards, placing them jointly in second position among Chinese manufacturers.
Hygon, MetaX, and Iluvatar CoreX each contributed 5%, 4%, and 4% respectively to the total domestic shipments from Chinese producers.
In 2025, the central government rolled out a new wave of spending for AI infrastructure. Local governments used those funds to accelerate the construction of AI data centres across various provinces. The majority of the new infrastructure built is directed towards purchasing Chinese-made chips.