Nvidia’s China AI chip share set to plunge as Huawei gains ground

Jensen Huang's warning about the consequences of losing China's AI market to domestic hardware is drawing renewed attention as fresh data shows American chipmakers rapidly losing ground in the world's second-largest AI economy.

The Warning

In an April interview with podcaster Dwarkesh Patel, the Nvidia ↗ 0.73% CEO warned that if DeepSeek optimized its next-generation AI models for Huawei silicon rather than American hardware, "that is a horrible outcome for our nation." Huang argued that if "future AI models are optimised in a very different way than the American tech stack" and those standards spread globally, China "will become superior to" the United States.dwarkesh+2

The remarks resurfaced this week after a Prof G Markets segment in which China analyst Alice Han and host Ed Elson revisited the exchange. Elson called it "the first time I've seen him as defensive." Han noted DeepSeek's funding will likely be "state-led" rather than venture-backed, and that hardware access remains the critical bottleneck.247wallst+1

China's Domestic Chip Market Closes the Door

A Digitimes report published Thursday found that China's high-end AI chip market could become almost entirely domestic in 2026, with local solutions expected to capture nearly 90% of sales. Bernstein has forecast Nvidia's China AI chip market share falling from roughly 40% in 2025 to just 8% in 2026 as Huawei scales its Ascend 950 processor. The Associated Press reported in June that Huawei roughly matched Nvidia's China market share in 2025, but momentum has since shifted decisively toward local suppliers.marketscale+2

Nvidia's Q1 FY2027 guidance of approximately $78 billion in revenue explicitly assumed zero China Data Center compute revenue. The H20 export ban forced a write-down exceeding $4.5 billion.indmoney+2

The Business Holds — For Now

Despite losing access to what Huang has pegged as a $50 billion total addressable market, Nvidia's core business remains strong. Full-year FY2026 revenue reached $215.94 billion, and Q1 FY2027 revenue came in at $81.6 billion. Wall Street maintains overwhelmingly positive ratings, with 57 analysts recommending a buy.finance.yahoo+1

Yet the strategic risk is structural. Reports from The Information and Reuters indicated that DeepSeek's V4 model was being developed for Huawei's Ascend 950PR processor, a move that could erode CUDA's position as the default platform for global AI development. Han flagged that U.S. export policy has gone "off, on, off, on," leaving Nvidia without a coherent path back into the Chinese market.scmp+1