Nvidia's dominance in China's market for data center AI chips is eroding fast. New figures from research firm IDC, seen by Reuters, show the US chipmaker's share of the country's data center AI accelerator market fell to 34% in the first half of 2026, as export controls curtailed its supply and domestic rivals — Huawei above all — expanded aggressively into the space.
The shipment numbers behind the share are stark. IDC data shows Nvidia shipped 678,000 AI accelerators into China between January and June, a 44% decline from the same period a year earlier. Huawei, the single biggest beneficiary of the shift, shipped 572,000 units in the first half, up from just over 300,000 in the same period last year, giving it a 28% share of the market.
A Widening Field of Domestic Challengers
Huawei is no longer competing alone. Among the 11 Chinese chip manufacturers IDC tracks, nine recorded year-on-year growth in shipments. Alibaba's chip design division T-Head holds a 7% share, Cambricon has 5%, Baidu's Kunlun line accounts for 4%, and Haiguang Information holds 3%. The pattern suggests a broad-based buildout of domestic silicon rather than a single company's breakout — and a customer base increasingly willing to design around whatever domestic supply it can get.
The report attributed the shift in market share to two forces: US export control restrictions limiting what Nvidia can sell, and Chinese domestic competitors expanding their share to fill the space those restrictions created.
How Export Controls Reshaped the Field
The mechanism behind the shift is not complicated. US export control restrictions limit which of Nvidia's accelerators can be sold into China, and IDC's numbers trace the direct consequence: shipments into the country fell 44% year-on-year in the first half, while nine of the eleven domestic manufacturers it tracks grew. Demand for AI compute inside China did not fall alongside them — buyers who cannot source Nvidia hardware do not stop building data centers. They buy what they are allowed to buy, and what they are allowed to buy is increasingly Chinese.
The shift also has a compounding quality. Every deployment designed around Huawei or Cambricon silicon deepens domestic software toolchains, support relationships, and procurement habits — advantages that tend to persist even if trade rules eventually loosen. Hardware share, once surrendered, is notoriously hard to win back, because the surrounding ecosystem reorganizes around whoever is actually shipping.
The Policy Debate the Numbers Feed
The findings land in the middle of an ongoing fight in Washington over whether chip curbs are protecting US interests or simply handing China's market to its domestic champions. Nvidia's chief executive Jensen Huang has repeatedly criticized the export restrictions, arguing the policy effectively forces Nvidia to cede what it estimates as a $50 billion AI chip market in China to Huawei.
The IDC data is the most concrete quantitative support yet for that argument. Two years of tightening controls have coincided with Nvidia's China shipments falling by nearly half and Huawei's roughly doubling — a crossover trajectory that, if sustained, would make the Chinese domestic leader the country's largest AI chip vendor within a couple of years.
What the Report Does Not Say
There are real caveats. IDC did not specify which Nvidia products make up the 34% share, and it remains unclear whether the figure includes flagship parts such as the B200 and B300 or only the China-specialized export variants. That distinction matters for interpreting how much of Nvidia's retreat reflects policy rather than product competitiveness. As of the report's publication, Nvidia had not responded to requests for comment.
It is also worth remembering that China is one market. Nvidia's global data center revenue continues to be driven overwhelmingly by demand outside China, where its parts face no restrictions. The company loses China share with every new restriction; what it has not yet lost is its global position.
A Market Reading the Signals
The report arrives amid a broader wobble in AI-related equities. Chip stocks fell on Tuesday after Broadcom's chief executive compared many AI investors to "casino" gamblers, and reports that Chinese memory maker CXMT was progressing on a new chip architecture hit South Korean technology firms, according to The Guardian's market coverage. Investors are increasingly alive to the possibility that US chipmakers' China revenue — once a reliable growth engine — is structurally shrinking.
For China's part, the domestication of its AI compute stack is now a stated industrial goal, and the shipment data suggests it is working. The open question is no longer whether Chinese AI chips can find buyers at scale — IDC's numbers show they are — but how quickly their software ecosystems mature and whether they can serve workloads at the frontier, not just the middle. For continued coverage of the hardware race behind the AI boom, follow our latest AI developments.
