AI chip makers like Huawei are expected to benefit immensely as the US tightens screws on Nvidia’s sales to China, semiconductor analysts have said.
Nvidia’s rivals in China are seen filling the gap as the country also looks at limiting overreliance on US AI products and services at a time geopolitical tensions are escalating.
Huawei now has a chance to fill the gap
This comes as the US Department of Commerce revealed last week that Nvidia’s H20 graphics processing units will now require export licenses, as would additional chips from AMD. This is despite that the H20 GPUs were made to comply with the previous restrictions.
With the new requirements, the chip-making giant revealed it has already paused exports of the GPUs, which has resulted in a quarterly charge of about $5.5 billion.
While Nvidia suffers this loss, it is not all doom and gloom in China, as this is expected to be a major gain for domestic manufacturers at a time when they are also considering alternatives to Nvidia chips.
“There are several local Chinese companies that produce chips to compete with Nvidia.”
~ Brady Wang, associate director at Counterpoint Research
According to Wang, these local competitors now have greater opportunities to improve on their solutions while demand for their GPUs will also increase.
Other Chinese chip-making firms include Cambricon Technologies, partly state-owned and publicly listed.
Shares of Cambricon, which designs GPUs, rose over 10% in the past five trading days amid news of the latest Nvidia controls. Cambricon is up over 400% in the past 12 months.
As for Huawei, it is one of the US blacklisted firms, and has already been working towards coming up with alternatives to the Nvidia chips.
Huawei stands to lead the race in China and fill the gap
Since it was blacklisted, Huawei has positioned itself as a leader in China’s AI race to compete with Nvidia, analysts have indicated.
According to a recent report from independent semiconductor research firm SemiAnalysis, although Huawei remains “a generation behind chips,” the tech firm is making waves with the hardware that uses them.
The company has also been working on its Ascend 910 GPU series, with the latest being the Ascend 910C and the company is reportedly looking at mass shipment of the GPUs to Chinese customers as early as next month, taking on Nvidia’s market.
“With Nvidia’s H20 and other advanced GPUs restricted, domestic alternatives like Huawei’s Ascend series are gaining traction,” said Doug O’Laughlin, an industry analyst at SemiAnalysis.
“While there are still gaps in software maturity and overall ecosystem readiness, hardware performance is closing in fast.”
~ O’Laughlin industry analyst at SemiAnalysis
Some industry watchers have also indicated that export controls have also hindered China’s ability to produce advanced GPUs at the same scale that Nvidia can through its partner TSMC, which is the world’s largest contract chip maker.
“Huawei has shown to be a competitive fabless chip designer … but they struggle to find enough supply from their foundries,” said a semiconductor-focused equity analyst for Moningstar, Phelix Lee.
TSMC has complied with the US trade restrictions on Huawei as well as the sale of advanced chips to China as its equipment includes US technology. As a result, this has left Chinese firms to become increasingly reliant on domestic foundries like Semiconductor Manufacturing International Corporation (SMIC).
BREAKING: Nvidia shares, $NVDA, fall over -3% as Huawei prepares mass shipments of its advanced 910C AI chip for Chinese customers as early as next month.
Just last week, the US restricted exports of Nvidia's H20 chip to China.
Huawei is looking to steal Nvidia's market share… pic.twitter.com/xXJL32jA34
— The Kobeissi Letter (@KobeissiLetter) April 21, 2025
However, SMIC is also under its own export controls, preventing it from getting some of the world’s most advanced chipmaking equipment.
With such conditions, the market awaits to see if China can meet the demand for H20 GPU alternatives for the domestic market anytime soon.
Lee opines that the country can survive in the meantime, thanks to stockpiles and previous export exemptions and loopholes. Chinese companies reportedly had placed orders for at least $16 billion in H20 server chips in Q1.
Filling the H20 GPU’s gap therefore might not be a problem in the short to medium term.
“I believe the impact of the controls is limited… In the middle to longer term, it will depend on the progress of its local GPU development,” said Wang.
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