China's AI Buyers Pivot to Homegrown Chips as Nvidia's Share Set to Slide

A major shift is taking hold in China's AI semiconductor market. In May 2026, nine domestically developed AI processors were certified for Chinese state procurement, clearing the way for local chips to compete directly for government contracts that have historically been a core revenue stream for Nvidia in the country. The approved roster includes products from Huawei, Biren, Alibaba and other Chinese suppliers. With these chips now eligible for state purchasing, Nvidia's position is expected to erode rapidly: its share of China's AI chip market is projected to fall from about 66% in 2024 to roughly 8% by 2026. Huawei's Ascend line is the most prominent name on the list. Huawei is forecast to take around 50% of China's AI chip market by 2026, up from about 40% in 2025. Alibaba's THead chips were also included, giving the company a direct channel into government AI infrastructure spending. Policy signals in Beijing point to a stronger push for domestic silicon. Reports indicate authorities are urging firms to prioritize local chip sources, with the possibility of formal limits on Nvidia purchases for certain entities and projects. For Nvidia, the pressure has been building on multiple fronts: U.S. export controls have restricted access to its most advanced GPUs, shipments of China-compliant modified models have faced customs delays, and procurement guidance is now steering demand toward local alternatives. Chinese chipmakers continue to acknowledge a performance gap versus Nvidia's newest platforms. Huawei's Ascend processors and other domestic options do not yet match the raw compute throughput of Nvidia's H100 or B200. Huawei is working to scale Ascend production through 2026. Its ability to deliver at volume will be a key test of whether China's chip self-reliance drive becomes a lasting market realignment or remains a short-term political campaign, with early signs pointing to a structural shift.