Nvidia's share of China's AI chip market is falling, and Huawei is the company taking the ground. That is the core finding of a Reuters report on one of the most consequential shifts in the semiconductor trade right now: Washington's export controls are doing what they were designed to do — box Nvidia out — and Huawei is stepping into the space they opened.

For years the picture looked lopsided. Nvidia supplied the overwhelming majority of the AI processors that Chinese cloud providers, internet giants and AI labs used to train and run large models. Its A100 and H100 data-center GPUs, and the China-specific variants that followed each new round of US restrictions, were the default choice. Buyers paid a premium for CUDA software compatibility and for hardware no domestic vendor could match.

That default is eroding. Reuters reports that Nvidia's position in China has weakened as Huawei ramps its Ascend AI accelerator line and wins increasing acceptance among Chinese customers who once had little alternative to Nvidia silicon.

Why is this happening now?

US export controls sit at the center of the story. Successive rounds of restrictions, tightened through 2023 and beyond, blocked Nvidia from selling its most advanced data-center GPUs in China and forced the company to develop cut-down parts that comply with the rules. Each compliant variant gives Chinese buyers less reason to prefer Nvidia over a fast-improving domestic option.

Huawei, meanwhile, has pushed its Ascend processors as the national alternative. The company has invested heavily in the full stack — chips, software and the manufacturing partnerships needed to build AI systems at scale — and Chinese firms have grown more willing to work around the ecosystem gaps that once made Ascend a hard sell. Beijing's push for semiconductor self-sufficiency turns every Nvidia shipment lost to regulation into a potential Huawei design win.

The result is a market bifurcating along geopolitical lines. Nvidia keeps the hardware and software maturity that still draws demand wherever it can legally sell. Huawei keeps the home-field advantage: government backing, a captive pool of state-aligned customers, and a product line that improves with every process generation its supply chain can deliver.

What does it mean for the market?

For Nvidia, China was long one of its largest single markets, and the company has repeatedly warned investors that export controls would cap what it can earn there. Every point of share that shifts to Huawei narrows Nvidia's addressable AI opportunity in the world's second-largest economy, even as data-center demand elsewhere in the world runs hot.

For Huawei, the gains validate a strategy that critics once dismissed as unworkable under US sanctions. Selling more Ascend silicon into Chinese AI buildouts converts political pressure into commercial revenue, and it gives Huawei the volume and field experience to keep iterating.

For the broader supply chain, the shift signals that China's AI compute market is becoming a separate contest with its own leaders, its own tools and its own pricing — no longer simply a delayed reflection of Nvidia's global product cycle.

Reuters' reporting points to a trend still in motion rather than a finished reversal. But the direction is clear, and it raises the question of whether Nvidia can hold a meaningful China business under current rules — or whether Huawei's rise, once a remote scenario, becomes the region's new baseline.