China is trying to convince its tech giants to abandon Nvidia chips in favor of domestic semiconductors, but leading AI labs continue to favor Nvidia hardware for training their advanced models. Huawei claims its Ascend chips outsold Nvidia in China as of October 2026, driven notably by inference deployments. However, Nvidia’s CUDA software platform creates a competitive moat that is difficult to overcome, with transition costs estimated at roughly 50% higher. US restrictions on advanced chip exports are pushing China to accelerate its semiconductor self-sufficiency, with domestic chipmakers projected to capture approximately 50% of China’s AI accelerator market by 2026, versus only around 8% for Nvidia.
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