There’s something that Jensen Huang has probably been keeping close to him, and it wasn’t until Wednesday when he openly mentioned it without mincing words at all. In an interview with CNBC following Nvidia’s impressive earnings report, where revenues climbed 85 percent to $81.62 billion, the CEO revealed that the company has “largely conceded” the China AI chip market to Huawei. No beating around the bush. No playing it down. Conceded.
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But the entire narrative behind why things got this far is important to know. Prior to the successive US export regulations that grew increasingly stricter starting from 2022, Nvidia dominated about 95 percent of the Chinese market for advanced AI accelerators. The rationale behind US policies was simple enough: starve China of premium AI technology, hinder its progress in AI, and thus retain its lead. The regulations ultimately led to the restriction of high-performing chips like the H100 and A100, even downgrading chips like the H20, before completely excluding Nvidia from China’s supplier list.
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It did not go as planned. China did not wait and acted. When Nvidia’s route became inaccessible, the path opened for Huawei. Huawei’s artificial intelligence chips are expected to generate sales worth roughly $12 billion in 2026, a significant increase from $7.5 billion in 2025, courtesy of its new AI processor, Ascend 950PR, that went into mass production in March and received bulk orders from leading tech companies in China. “Huawei is very, very strong. They had a record year, they’ll likely have an extraordinary year coming up, and their local ecosystem of chip companies are doing quite well, because we’ve evacuated that market,” Huang said.
But let us look closer at the last phrase, “we’ve evacuated.” The statement makes it sound like the exit is a choice. Yes, it is one, but it is somewhat revisionist since Nvidia did not make a choice – it was pushed there and barred from the entry. Commerce Secretary Howard Lutnick admitted the following: despite US clearance of almost 10 companies in China, such as Alibaba and Tencent, to buy H200 chips, Beijing refused to allow them to go through by instructing domestic firms to invest only in home-grown chips.
Huang told investors to “expect nothing” on China approvals, saying Nvidia had set its guidance and analyst expectations to reflect zero contribution from the market. That’s not pessimism, it’s just arithmetic. Huang has previously described China as a $50 billion AI chip market. Nvidia’s cut of that is now exactly zero.
The quarter that Huang was reporting during these comments is remarkable in any event. Nvidia announced an $80 billion share repurchase program as well as an increased dividend. Nvidia does not need China to succeed at this point in time. However, the larger strategy cannot be ignored. In less than three years, China has gone from almost 0 to somewhere between $30-$35 billion in an AI chip market domestically. An AI ecosystem – that can run without US chips – has already begun taking shape.
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