NVIDIA and AMD Could Fall to 10% of China AI Chip Market as Domestic Suppliers Expand

NVIDIA and AMD could see their combined share of China's AI chip market fall to about 10% in 2026 as domestic semiconductor companies increase production and local cloud providers rely more heavily on Chinese hardware.

The forecast reflects two forces developing at the same time. China is investing heavily in domestic AI accelerators, while US export controls continue to restrict access to some of the most advanced American chips.

Domestic products are expected to account for around 90% of China's AI chip market during 2026 if the current forecast proves accurate. That would mark a major change in a market where NVIDIA hardware has historically played an important role in AI development.

China's domestic AI chip shipments are rising

Area	2026 outlook
Domestic Chinese chip market share	Around 90%
NVIDIA and AMD combined share	Around 10%
Growth in high end domestic AI chip shipments	About 83% annually
Earlier domestic shipment estimate	Around 5 million chips
Key domestic suppliers	Huawei, Cambricon and custom ASIC developers
Major custom chip developers	Baidu, Alibaba and Tencent

High end domestic AI chip shipments are expected to rise by about 83% year over year during 2026. Earlier estimates also suggested that Chinese AI chip shipments could reach roughly five million units this year.

Local manufacturing capacity is expanding as well. Chinese semiconductor foundries are expected to increase production of AI processors over the next several years, supported by government incentives and stronger demand from domestic technology companies.

These chips do not necessarily match the performance of the most advanced products available from NVIDIA, but supply and accessibility matter heavily in China. Companies that cannot reliably obtain high end US hardware have stronger incentives to adopt domestic alternatives.

Large technology companies are also developing their own custom accelerators. Baidu, Alibaba and Tencent are among the companies using application specific integrated circuits designed for AI workloads, while Huawei and Cambricon continue to expand their own processor portfolios.

US restrictions continue to reshape the market

NVIDIA and AMD are not completely blocked from selling AI hardware in China, but access to advanced products remains tightly controlled.

Those rules have encouraged chipmakers to develop modified products that remain within export requirements.

Such products could allow NVIDIA to maintain some presence in China even as domestic alternatives become more common.

The company has used a similar strategy before, developing reduced specification versions of its processors specifically for markets affected by export controls.

Domestic chips do not need to match NVIDIA immediately

A rising domestic market share does not necessarily mean Chinese processors have already caught up with NVIDIA's fastest AI hardware.

Performance remains only one part of the purchasing decision. Availability, regulatory certainty, pricing and the ability to deploy hardware at large scale are also important.

A slightly slower chip that can be purchased in large quantities may be more useful to a Chinese cloud provider than a faster foreign processor with uncertain availability.

That dynamic is helping local companies gain market share more quickly than raw performance comparisons might suggest.

If domestic suppliers reach the projected 90% share during 2026, NVIDIA and AMD would face a much smaller addressable market in China. The shift would also strengthen China's effort to reduce dependence on foreign semiconductor technology.

For NVIDIA and AMD, the challenge will be maintaining a commercially useful product lineup that complies with changing export rules while competing against rapidly expanding domestic alternatives.