What's happening
Huawei expects AI chip revenue to reach $12 billion in 2026, representing a 60% increase from $7.5 billion in 2025, based on current orders according to Financial Times sources. The majority of orders are for the company's Ascend 950PR chip, which entered mass production in March 2026, with plans to launch an upgraded Ascend 950DT chip in Q4 2026.
The Chinese technology company is projected to capture 60% of China's AI chip market by the end of 2026, as domestic companies increasingly seek alternatives to Nvidia's products amid U.S. export restrictions. China's AI chip market from domestic suppliers is estimated at $21 billion in 2026, part of a broader trend toward technological self-sufficiency in critical semiconductor segments.
Why it matters for markets
The revenue projection underscores the accelerating bifurcation of the global AI chip market, with China developing domestic alternatives that could permanently reduce U.S. companies' access to the world's second-largest economy. Nvidia, with a market capitalization of $4.82 trillion and revenue of $215.94 billion, faces potential long-term revenue pressure as Chinese customers shift to local suppliers like Huawei.
China's overall AI chip market is projected to reach $67 billion by 2030, with domestic players expected to supply 86% of that demand. This represents a significant addressable market that U.S. chipmakers may be increasingly excluded from, potentially affecting growth trajectories for companies that have historically relied on Chinese customers for substantial portions of their revenue.
The development highlights intensifying competition in the global AI semiconductor space, where geopolitical tensions are reshaping supply chains and market access. As Huawei scales production of its Ascend series chips, established players like Nvidia and AMD may need to compensate for reduced Chinese market share through growth in other regions or market segments.
Sectors and assets to watch
Nvidia (NVDA), trading at $198.45 with a P/E ratio of 40.5, faces the most direct impact as Chinese companies shift away from its H100 and Blackwell GPU products toward domestic alternatives. The company's high valuation reflects expectations for continued AI market dominance, which could face pressure if the Chinese market becomes increasingly inaccessible.
AMD (AMD), with a market cap of $587.83 billion and trading at $360.54, may experience similar headwinds for its Instinct MI-series AI accelerators in the Chinese market. However, both companies may benefit from increased demand in other regions as global AI adoption accelerates, potentially offsetting some Chinese market losses through expansion in markets where they maintain full access.
What to watch next
Monitor Huawei's Q4 2026 launch of the Ascend 950DT chip and its market reception, as successful adoption could further solidify the company's position in China's AI infrastructure buildout. Track quarterly earnings reports from Nvidia and AMD for commentary on China revenue trends and geographic diversification strategies, particularly as the Chinese AI chip market approaches the projected $67 billion by 2030 with increasing domestic supplier dominance.