Chinese semiconductor companies have significantly increased their presence in the domestic market, capturing 41% of the local AI server sector and delivering 1.65 million AI GPUs out of a total of 4 million units projected for 2025. According to IDC data reported by Reuters, Nvidia continues to lead the market with a 55% share, having shipped approximately 2.2 million cards. This marks a notable contraction from the company’s previously claimed 95% market share prior to U.S. sanctions.
Among the rising Chinese chipmakers, Huawei emerges as a key player, shipping around 812,000 AI chips, which accounts for nearly 20% of the market. The Shenzhen-based firm is actively developing its AI processors, recently unveiling the Atlas 350 AI accelerator, touted to offer nearly three times the performance of Nvidia’s H20 chips. T-Head, a subsidiary of Alibaba, claimed the third spot with 256,000 units sold, trailing behind Huawei.
AMD finds itself just outside the top three, delivering 160,000 units for a 4% share of the domestic AI chip market. Baidu’s Kunlunxin AI chip subsidiary and Cambricon, another Chinese AI chip manufacturer, complete the top five, each contributing 116,000 units to the market.
Despite the U.S. banning Nvidia and AMD from exporting their advanced chips to China in 2023, many Chinese tech companies have shown a preference for modified versions of these GPUs, such as the Nvidia H20 and AMD MI308. However, a complete ban on AI GPU exports was enacted in April 2025 under President Donald Trump, compelling Chinese firms to increasingly depend on domestic manufacturers.
In a significant policy shift, Trump reversed the ban on the H20 and MI308 in July 2025, while advising Chinese companies against ordering Nvidia’s chips following comments made by U.S. Commerce Secretary Howard Lutnick. By December 2025, Trump had a complete U-turn, permitting Nvidia to resume shipments of the H200 to China. Yet, it took several months for Chinese companies to begin ordering these U.S.-only chips, and then only for specified institutions and applications.
Beijing is navigating a complex landscape where it aims to bolster its domestic chip industry while ensuring its AI technology firms maintain competitiveness in the global arena. Although Chinese chipmakers have made significant advancements, they still lag five to ten years behind Nvidia and AMD in the AI data center chip market. Nonetheless, government initiatives appear to be yielding results, as evidenced by the increasing market share of local chip manufacturers.
Looking ahead, it remains uncertain whether Washington’s decision to permit Nvidia to sell its H200 chips to China will allow the company to reclaim its former market share in 2026. Even if Chinese firms are eager to purchase these AI GPUs en masse, Beijing’s concerted efforts to redirect some demand toward domestic semiconductor production are likely to complicate Nvidia’s path back to its pre-sanctions market presence.
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