Nvidia in danger in China – Huawei clears the dominant position

A Chinese technology company Huawei is on track to overtake the chip giant Nvidia’s dominant position in China.

According to the Financial Times Huawei is about to gain the majority of China’s AI chip market this year. The company’s turnover is estimated to increase by at least 60 percent, as Chinese companies prefer domestic products instead of Nvidia chips.

Chinese technology companies have placed significant orders for Huawei’s latest Ascend 950PR processor. According to media reports, the customers include, among others ByteDance, Alibaba and Tencent.

Huawei estimates that the turnover of its artificial intelligence chips will rise to about 12 billion dollars this year, based on the orders already received. The growth is considerable, as last year the corresponding turnover was 7.5 billion dollars. The majority of this year’s orders are for the 950PR model, which went into mass production in March. The company is also planning to release an updated version at the end of the year.

While Nvidia has been plagued by regulatory hurdles in the US and China, Huawei has been aggressively expanding its chip production capabilities. The company’s artificial intelligence chip turnover forecast may still rise if production can be expanded.

Although Nvidia has received permission from the US authorities to sell its H200 chips to China, shipments have not yet started. According to sources, Beijing has instructed local companies to favor domestic production, while the United States insists that the chips delivered to China remain inside the country. The conflict has led to customs clearance problems.

Although Huawei’s technology is still at least two generations behind Nvidia, the company has steadily improved the performance and efficiency of its chips.

In April, a Chinese artificial intelligence company Deepseek said it uses Huawei’s 950PR processors in the V4 model, which has resulted in increased inference efficiency at lower costs. However, most of the chips used with the V4 model are from Nvidia.

CEO of Nvidia Jensen Huang commented on the matter in a podcast and said that if Deepseek starts favoring Huawei, it will be a terrible fate for the US and could lead to AI models around the world being developed and made to work on non-US devices.

Huawei has positioned its latest processors especially for artificial intelligence “inference”, i.e. the process where ready-made language models produce answers.

The company believes that in the future, the demand for inference will exceed the training of models as artificial intelligence applications become more common. In addition, Huawei uses its strong network expertise to build efficient computing clusters, which compensates for the lower performance of individual chips.

One of Huawei’s biggest challenges has been to develop software as good as Nvidia’s. Huawei uses the Cann system, which is more difficult to use than Nvidia’s Cuda, which is the world leader. Difficulty in use increases customers’ operating costs.

According to Morgan Stanley’s forecast, China’s AI chip market will grow to $67 billion by 2030. Domestic manufacturers are expected to control 86 percent of the market at that time.

Nvidia will announce its first quarter interim report on May 20.