GoKawiilChinese AI and graphics chips flooded the country's domestic market in 2025, leading to a decline in Nvidia's chip dominance in the region and a boon for China's efforts to foment a local supply chain for AI compute power. With 41% of the Chinese AI server market now controlled by Chinese suppliers, Nvidia has even more reason to restart its shipments of H200 GPUs to the region, despite the bipartisan efforts of U.S. Senators to stop that in its tracks.
Although Nvidia still holds a commanding stake in the region, with a 55% market share for AI server hardware, that's a huge downturn from Nvidia's claimed peak of 95% in 2022, before the U.S. began applying sanctions to China and trade export restrictions to Nvidia.
The concern about Chinese AI hardware developments doesn't just come from its ability to supplant Nvidia in the region, but to spread beyond it. Although hardware developed by the likes of Baidu, Huawei, and Cambricon can't compete with Nvidia's cutting-edge chips, it is growing increasingly capable, and in a world facing long-term shortages of everything, AI hardware included, the next-best-thing becomes a lot more attractive.
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Losing its grip
The H20 is a cut-down version of the Nvidia H100 die for the Chinese market. (Image credit: Nvidia)
Although it's hard to verify how accurate Nvidia's "95%" claims were, it's fair to say that the US chip giant was once the only real player in town. Its GPUs are vastly more performative than even the best Chinese alternatives today, and even its cut-back China-specific GPUs like the H20 have their advantages.
But over the past few years, with turbulent supply and even more turbulent U.S. leadership, China has fostered its own chip industries with a range of measures. From energy subsidies to mandated chip deployments and enormous financial investment, China is betting the farm on developing its own alternatives to Nvidia's best.
The country isn't there yet: China had to roll back demands to use domestic chips for training, which just can't offer a clear alternative to Nvidia's hardware. But on the inference side of things, Chinese companies are catching up, and with the long, slow return of Nvidia's H200 GPUs, real competition has been rising.
Throughout 2025, Chinese tech giant Huawei shipped over 812,000 AI chips to Chinese firms and organizations, representing around half of all domestic shipments, making it the largest Chinese chip supplier of the year. This was followed by Alibaba's chip design unit, T-Head, which shipped 265,000 graphics cards, while Baidu's Kunlunxin and Cambricon each shipped around 116,000 GPUs, making them joint third.
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