[News] Chinese Firms Reportedly Raise Domestic AI Chip Budget Share from 30% to 46% Amid Shift from NVIDIA

Chinese companies are increasingly shifting away from NVIDIA’s advanced AI accelerators in favor of domestic alternatives. According to Bloomberg, executives surveyed expect domestic products to account for 46% of their AI accelerator budgets over the next 12 months, up from 30% currently.

Meanwhile, the report adds that 80% of executives said their total infrastructure spending is exceeding budget this year, largely due to the high cost of AI-related projects. As the report points out, China’s largest AI infrastructure builders and their key suppliers—including Tencent, Alibaba, and Huawei—are well positioned to benefit from the shift. The country’s push to replace foreign AI semiconductors is also likely to favor local players such as Huawei and Hygon.

Against this backdrop, the report notes that while NVIDIA’s products remain in strong demand, its market share is expected to decline as its H20 accelerators become increasingly difficult to obtain after Beijing urged domestic technology companies to avoid using them.

The changing competitive landscape is also reflected in market forecasts. According to eToday, investment bank Bernstein projected that NVIDIA’s share of the Chinese AI semiconductor market will fall to around 8% in 2026, down from approximately 40% last year. Conversely, it predicted that Huawei’s share would surpass 50%.

The shift is also being reinforced by government investment. Bloomberg notes that China plans to invest about two trillion yuan (US$294 billion or $380 billion) over the next five years to build data centers nationwide as part of a government-led initiative to expand AI adoption across sectors ranging from healthcare to city management. At least 80% of core technologies, including chips, are expected to be supplied by domestic companies.

Commercial Adoption of Domestic AI Chips

The broader push toward domestic AI chips is also gaining commercial momentum. According to Reuters, ByteDance is reportedly in talks to source AI inference chips from Iluvatar CoreX while also evaluating processors developed by Baidu’s Kunlunxin.

Reuters notes that the potential deals suggest Chinese chipmakers are gaining traction in providing alternatives to foreign AI chips, as Beijing continues promoting the adoption of domestically developed semiconductors to strengthen self-reliance amid U.S. export controls on advanced chips.

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(Photo credit: NVIDIA)