Nvidia Faces Threat as AI Buyers Shift to Local Chips in China

Multiple reports indicate that NVDA and AMD face a fresh threat in China as AI buyers increasingly shift toward domestically produced chips.,, and all describe this trend, which could weigh on both companies' China-derived AI chip revenue over time.

A recent survey of executives across Chinese software, finance, manufacturing, and retail firms found companies plan to route roughly 46% of their AI accelerator budgets to domestic vendors over the next 12 months, up from about 30% today. Beneficiaries named in the survey include Huawei, Hygon, and Cambricon, alongside Tencent and Alibaba expanding their own AI infrastructure. Huawei's Ascend chip line in particular has been gaining share as Nvidia's China sales come under pressure from a mix of export restrictions and Beijing's push for self-sufficiency. China's National Development and Reform Commission has also certified nine domestically developed AI processors for state procurement as of May 2026, opening government-linked contracts that were previously dominated by Nvidia.

The shift matters because China has historically been one of the largest addressable markets for AI accelerators, and a sustained pivot to local silicon could compress the ceiling on Nvidia and AMD's China revenue even as both companies continue to post strong results elsewhere. It remains unclear how quickly domestic chips can match the performance and software ecosystem of Nvidia's CUDA platform, so investors should watch whether Chinese buyers' stated intentions translate into actual displaced orders, and whether further U.S. export rules or Chinese state mandates accelerate the transition.

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