Huawei is poised to capture the largest share of China's AI chip market this year, with sales climbing at least 60% amid strong domestic demand. Chinese tech companies are placing large orders for Huawei's latest Ascend 950PR processor, helping the company reach approximately $12 billion in AI chip revenue this year, up from $7.5 billion. The Shenzhen-based firm has aggressively expanded chipmaking capabilities as Nvidia faces mounting regulatory obstacles in both Washington and Beijing.

Nvidia's chief Jensen Huang announced in March that the company received US licenses to sell H200 chips to China, yet shipments remain blocked by regulatory restrictions. Beijing has instructed Chinese tech companies to prioritize domestic suppliers while restricting Nvidia chip usage to overseas operations only. US regulators require Nvidia chips ordered by Chinese clients be used exclusively within China, creating customs clearance complications for H200 shipments.

Morgan Stanley projects China's AI chip market will reach $67 billion by 2030, with 86% supplied by domestic players. The investment bank estimates the current market at $21 billion from Chinese suppliers. Huawei's strategy focuses on inference computing—the less technically demanding process of generating AI responses—which it expects to drive future demand as applications like agents proliferate.

Despite Huawei's progress, its CANN software platform still trails Nvidia's decade-old CUDA system, creating higher operating costs for clients. However, the structural shift toward AI localization in China appears permanent rather than temporary, driven by persistent export controls and rising inference demand.