Nvidia CEO Jensen Huang has admitted the company is losing market share in China as local competitors like Huawei gain momentum. While Nvidia reported $81.6 billion in quarterly revenue, new U.S. export restrictions and Chinese customs bans on specific Nvidia hardware are accelerating Beijing’s drive for semiconductor self-sufficiency.
Revenue Growth Meets China Market Losses
Nvidia remains a financial powerhouse, recently reporting $81.6 billion in quarterly revenue, representing an 85% increase compared to the same period last year. However, this growth masks a growing strategic vulnerability. According to news.google.com, the company is losing its grip on the Chinese market due to U.S. trade restrictions.
“Demand from China is very high. Huawei is very strong.
The company’s data center division, which once generated at least one-fifth of Nvidia’s revenue from China, has seen its position shift following new rules introduced by the Trump administration in April. These rules require special authorizations for exporting advanced AI chips, a move that has redirected Chinese demand toward domestic manufacturers.
The RTX 5090D V2 Customs Ban
While Washington has sought to limit China’s access to advanced AI processors, Nvidia attempted to find a middle ground by creating downgraded versions of its hardware specifically for the Chinese market. This strategy faced a significant setback when XTB.com reported that Chinese authorities added the Nvidia RTX 5090D V2 to a list of prohibited goods at customs.
Although marketed for gaming and 3D animation, the chip was being used by AI engineers to access Nvidia’s Blackwell architecture. The ban highlights Beijing’s determination to block even these restricted versions of American technology. The political friction is palpable; Donald Trump, speaking from Air Force One after visiting Beijing, suggested that the refusal of Chinese firms to purchase Nvidia’s H200 chips was a deliberate choice. He claimed that China chose not to</wp:quote> approve those purchases because they want to develop their own chips</wp:quote>, via Antena 3 CNN.
NIST and Stanford AI Performance Metrics
The technological struggle involves more than just hardware availability; it includes a narrowing gap in intelligence capabilities. Reports from PressOne indicate that the performance difference between top American and Chinese AI models has dropped to just 2.7%, a sharp decline from the 17 percentage point gap observed in 2023. The U.S. agency NIST, through its CAISI unit, estimates this performance gap is now approximately eight months.
This competition has triggered a cycle of retaliation. While the U.S. restricts high-end AI processors, China has responded with restrictions on the export of rare earth minerals essential for manufacturing electronics. Parallel to these hardware battles, the software front is also heating up. In February 2026, the American company Anthropic documented an industrial scale distillation</wp:quote> campaign conducted by three Chinese laboratories: DeepSeek, Moonshot, and MiniMax.
Alibaba’s Zhenwu M890 Chip Launch
On May 20, Alibaba Group signaled its intent to bypass American silicon entirely by unveiling the Zhenwu M890 AI chip. Developed by its T-Head subsidiary, the series is designed to power AI agents capable of managing complex, automated tasks. As reported by Vietnam.vn, the new series offers three times the performance of its predecessor, the Zhenwu 810E.
Alibaba has already delivered over 560,000 Zhenwu chips to more than 400 clients, including financial services and automotive manufacturers. Zhang Guobin, the founder of eetrend.
“A reliable option, unaffected by fluctuations caused by export controls, allowing domestic AI companies to build a long-term technological roadmap.
The company’s long-term roadmap includes the launch of the next-generation V900 chip in the third quarter of 2027, followed by the J900 in the third quarter of 2028, which is expected to offer another threefold increase in performance.
Huawei’s 60% Sales Surge and the 2030 Outlook
The shift toward domestic hardware is already yielding massive results for Chinese manufacturers. According to Antena 3 CNN, Huawei’s sales are growing by at least 60% as companies seek internal alternatives to Nvidia.
Market analysts expect this trend to define the coming decade. Morgan Stanley predicts the Chinese AI chip market will reach $67 billion by 2030, with 86% of that market being supplied by domestic groups. For the current year, the market is estimated to be worth $21 billion, with domestic suppliers expected to capture the vast majority of that value. While Jensen Huang maintains that the market will open over time</wp:quote>, the immediate trend suggests a rapid acceleration of China’s independent semiconductor ecosystem.
