Nvidia's China troubles deepened as its rivalry with Chinese players took a new turn.

Nvidia's grip on China's AI chip market weakened sharply in the first half of 2026. Its market share fell to 34% as U.S. export restrictions limited supply and domestic rivals, led by Huawei, gained ground.

According to IDC data cited by Reuters, Nvidia shipped 678,000 AI accelerators in China between January and June, down 44% year over year. Huawei shipped 572,000 accelerators, up from more than 300,000 a year earlier, giving it a 28% market share. Nvidia still leads, but its advantage is much narrower.

Other Chinese chipmakers are also gaining traction. Alibaba's T-Head held 7% of the market, Cambricon had 5%, Baidu's Kunlunxin captured 4%, and Hygon accounted for 3%. Nine of the 11 Chinese chipmakers tracked by IDC increased shipments year over year.

China's total AI accelerator shipments reached 2.008 million units in the first half. GPU shipments, however, declined 26% to 991,000 as supplies of chips approved for sale in mainland China remained constrained.

The backdrop is largely regulatory. Washington has blocked China from accessing Nvidia's most advanced AI processors. Beijing, meanwhile, has increasingly promoted domestic alternatives and requires companies to seek approval before importing some Nvidia chips that comply with U.S. restrictions.

Nvidia CEO Jensen Huang has repeatedly criticized these policies, arguing that they are effectively handing China's roughly $50 billion AI chip opportunity to local competitors such as Huawei.

**Investor Takeaway**

The most important number here is not Nvidia's 34% share on its own. It is the speed at which domestic alternatives are closing the gap.

Nvidia's shipments fell 44%, while Huawei's nearly doubled. That suggests export restrictions are doing more than temporarily reducing Nvidia's sales. They are giving Chinese customers stronger incentives to build around local hardware ecosystems, which could create a lasting competitive problem even if restrictions eventually ease.

For Nvidia investors, China remains important because losing share there reduces access to one of the world's largest AI infrastructure markets and could strengthen future global competitors.

The key indicators to watch are Huawei's accelerator shipments, the performance of Nvidia's China-compliant chips, changes to export controls, and the adoption of domestic software ecosystems built around Chinese processors. If Huawei and other suppliers keep improving while Nvidia remains constrained, the market-share shift could become increasingly difficult to reverse.