Nvidia's China Chip Sales Stalled by U.S. Controls
Nvidia has not yet sold its U.S.-approved AI chips in China, expressing concerns that local Chinese rivals are gaining market share as a result. This comes as strategic analysis highlights the intensification of U.S.-China economic decoupling, with tightening export controls on advanced semiconductor technology creating unpredictability for manufacturers.
The U.S. government's export controls, first implemented in October 2022 and expanded since, are designed to curb China's military advancement by limiting its access to high-end AI chips. Nvidia created lower-powered chips like the H20 specifically for the Chinese market to comply with these rules, but even these sales have faced hurdles, requiring special licenses that have been slow to materialize. Before the latest controls, China accounted for about 26% of Nvidia's turnover. The restrictions have put an estimated $5.5 billion in potential revenue from the H20 chip at risk. CEO Jensen Huang has been a vocal critic, stating the export controls have been a "failure" that has cost Nvidia "billions of dollars" and only serves to energize and accelerate the development of local Chinese competitors. The U.S. Commerce Department has not yet approved any sales of Nvidia's more powerful H200 GPUs to China, despite a policy reversal allowing the company to seek licenses. This delay is compounded by Beijing's own push for technological self-sufficiency, with the government reportedly telling its tech giants to pause H200 purchases while it deliberates on the role of imported chips. Meanwhile, Chinese rivals are rapidly gaining ground. Huawei's Ascend AI chips are a strong competitor, and analysts predict Huawei could capture 50% of the Chinese AI chip market by 2026, shrinking Nvidia's share to just 8%. Other domestic players like Alibaba's T-Head, Baidu's Kunlun, and Cambricon are also seeing increased adoption, with at least nine Chinese firms now having shipped over 10,000 AI chips each. In the first half of 2025, Chinese-made AI chips captured about 35% of China's $16 billion AI server market. This growing domestic capability is a direct consequence of the U.S. restrictions, which have, in the words of Jensen Huang, given local companies "the spirit, the energy and the government support to accelerate their development."
