Nvidia's China Share Fell to 34% as Huawei Surged to 28%

Washington spent four years trying to choke China's AI ambitions. Instead, it choked its own champion. New IDC data seen by Reuters shows Nvidia's share of China's data-centre AI chip market fell to 34% in the first half of 2026 — and Huawei, the company the controls were designed to contain, nearly closed the gap at 28%. Four years of export controls, billions in foregone revenue, and a trade war fought one licence at a time: this is the scoreboard.

Photo: Jensen Huang, Nvidia's co-founder and CEO, photographed at Stanford University in April. Anders Eidesvik via Wikimedia Commons (CC BY-SA 4.0).

The numbers are worse than they look

Start with the raw arithmetic, because it is brutal. Nvidia shipped 678,000 AI accelerators in China between January and June 2026, down 44% from a year earlier, according to the IDC report. That is not a soft quarter. That is more than half a million chips that didn't ship — in a market that, as a whole, kept growing around Nvidia.

Total AI-accelerator shipments in China reached 2.008 million units in the half. Huawei shipped 572,000 of them, up from roughly 300,000 a year earlier, taking 28% of the overall market. Alibaba's chip-design arm T-Head held 7%, Cambricon 5%, Baidu's Kunlunxin 4%, and Hygon 3%. Nine of the eleven Chinese chipmakers IDC tracks increased shipments year over year. Read that again: while the one American supplier shrank 44%, nine Chinese competitors grew.

The GPU numbers are the tell. Shipments of graphics processing units — the chips that actually train frontier models — fell 26% to 991,000 units, because the supply eligible for sale in mainland China kept shrinking. China didn't stop buying AI compute. It stopped buying Nvidia AI compute, and built the rest itself.

A word on method, since we are picky about this: we checked the Reuters figures against three separate syndicated copies of the wire published overnight, and they match line for line. What IDC did not specify is which Nvidia products made up that 34% share, or whether it counted smuggled B200/B300 chips that are barred from export. Nvidia did not respond to Reuters' request for comment.

Washington built the wall that keeps Nvidia out

How does the company that defined the AI-chip era end up at 34% in the market that matters most? The answer is a vise closing from both sides.

From Washington's side, the export controls kept tightening. Nvidia was forced to design China-specific chips — the H20, then the H200 — each weaker than the last, each engineered to slide under a performance ceiling that kept moving. Then Beijing joined in: Chinese companies must now seek official approval to import even the compliant Nvidia chips Washington does allow. And approvals, as Jensen Huang has learnt the hard way, are a policy instrument.

The H200 saga says everything about the trap. Huang told Nvidia shareholders that the US government had approved export licences for the company's H200 chips — but that Nvidia has not generated revenue from them, because it remains unclear whether Chinese authorities will permit the imports. Read that twice: Washington said yes, Beijing said we'll think about it, and Nvidia's most advanced legal product for China sat unsold. When your biggest market won't buy what it's legally allowed to buy, the licence is theatre.

The black market isn't the answer either. Huang has been blunt about that too, warning that advanced data centres are integrated systems needing trusted hardware and ongoing support: "Trying to cobble together data centers with some smuggled products is a dead end," he said at the annual meeting. We've reported on the $2.5B AI-server smuggling scheme that showed how far some people will go to route banned hardware into China — a fixer pleaded guilty this month. The smuggling exists because the legal market doesn't.

Huang's verdict: "flourishing in our absence"

Nobody has argued against the controls harder than the man they were supposed to protect. Huang has spent the better part of two years making the case, in public and on earnings calls, that the policy is self-defeating — that it forces a US company to hand China's roughly $50 billion AI chip market to Huawei.

His most cutting line came on Fox Business in May, when he told the network that China has "all the chips they need" and that Huawei is "flourishing in our absence." That was five months before the IDC numbers landed. He was reading the wind; the data just confirmed it.

The exhaustion is visible if you look at our top photo — Huang photographed mid-answer at Stanford in April, leather jacket zipped to the collar, a small mic clipped beside it, answering students in a university lecture hall. The world's most important chip CEO, reduced to lobbying for the right to sell things.

And yet he won't pick a fight. On the fiscal 2026 earnings call, when an analyst asked about shipping an H20 replacement into China, Huang answered: "The president has a plan. He has a vision. And I trust him." Diplomacy as survival — the same government that won't let him sell in China is the one he needs permits from everywhere else.

Photo: Huawei's Shenzhen headquarters. RG72 via Wikimedia Commons (CC BY-SA 4.0).

Huawei's bench goes deep

Huawei didn't get to 28% on policy tailwinds alone. Its Ascend accelerators have become the default choice for Chinese cloud giants and state-linked projects, and the roadmap keeps moving — Bloomberg reported last autumn that Huawei was preparing an Ascend 910D follow-up for late 2026 on an enhanced SMIC 7-nanometre process, while Nvidia's Blackwell chips ship at 4nm from TSMC. Huawei still trails in single-chip performance; it makes up for it in volume, availability, and the simple fact that it doesn't need an import licence.

The ecosystem around it is maturing fast. Alibaba, Baidu, Cambricon and Hygon all took share in the same half that Nvidia bled — and behind them, the money is following. Tencent told bond investors this week that its roughly $5B bond sale is earmarked mainly for AI capex, most of it for chips. The same company signed a five-year lease for 100,000 AI chips it can't legally buy. When the biggest buyers in the market are raising debt to buy anything that computes, domestic suppliers stop being a fallback and start being the plan.

Wall Street got the message at 9 a.m. Seoul time

The market read the same tea leaves on Tuesday. South Korea's Kospi index dropped 7.4% to 5,914.35 — its lowest since late July and down roughly a third from the record above 9,000 it set in June. Samsung Electronics fell 7.7%; SK Hynix plunged 8.8%. Japan's Nikkei shed 2.5%, Tokyo Electron 6.6%, SoftBank 8%. Hong Kong's Hang Seng lost 1%, the Taiex 1.9%. Overnight in New York, the Philadelphia Semiconductor Index had fallen 2.7%, with Nvidia down 1.3%, AMD 2.3%, Micron 3.9% and Broadcom 1.9%.

To be fair, Tuesday's rout was about more than one IDC report. Investors are jittery about the AI boom itself — Broadcom's chief executive likened current market sentiment to a casino — and a report that China's CXMT has made progress on a denser 4F² memory architecture, with server products planned by year-end, rattled the memory giants. "Uncertainty over whether the upcycle can last into 2028 and beyond appears to be weighing on valuations and share prices," Ha SeokKeun, chief investment officer at Eugene Asset Management, told reporters. Seoul even briefly halted Kospi program trading — the first such halt since August — while foreigners sold a net $6.3 billion of Korean shares in October. The mood is fear, and fear doesn't check whether it's about memory or logic first.

Our judgment: this is a colossal own-goal

Let's say the quiet part out loud. The export controls were designed to slow China's AI progress by denying it the best chips. What they have demonstrably done is deny Nvidia the Chinese market while China builds its own chips faster than anyone in Washington predicted. That is not a policy that needs tuning. It is a policy that achieved the precise opposite of its stated goal — a colossal own-goal, four years in the making, with the IDC numbers as the receipts.

Nvidia's global business is fine; Blackwell demand drove revenue up nearly 70% in the first quarter. But China was supposed to be the growth story of the decade, and Huang knows it. Beijing doesn't even have to ban Nvidia outright. It just has to wait — approvals pending, domestic alternatives improving, $50 billion in annual spending redirecting itself. The wall Washington built isn't keeping China out of the AI race. It's keeping Nvidia out of China.

Sources: Reuters (Oct 13 — the IDC report); Bloomberg via Moneyweb (Oct 12 — Tencent $5B bond); Reuters (Oct 8 — Tencent bond mull); Associated Press (Oct 13 — Kospi selloff); The Edge Singapore (Oct 13 — chip rout); CRN (Nvidia earnings call); Times of India (Nvidia annual meeting); The Meridian (Fox Business, May — Huang interview); Bloomberg via i3investor (Sept 2025 — Ascend roadmap). All quotations verbatim from their cited outlets, under 15 words each.

— TechPulse USA, Cupertino and New York desks

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