Nvidia's China Chip Boom Faces Threat As Beijing Pushes For Homegrown AI

Nvidia NVDA has popularized the accelerators that China should ditch, a top government adviser warned, urging the country to develop domestic chips that enable artificial intelligence.

Wei Shaojun, a professor at Tsinghua University, a longtime advocate of domestically produced chips, told a forum in Singapore that Asian nations risk becoming dependent on U.S. general-purpose graphics processing units, which now power platforms from ChatGPT to DeepSeek.

Wei criticized the region for emulating American approaches to algorithms and large models, Bloomberg reported on Thursday.

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His comments come as Chinese firms struggle under years-long U.S. curbs that restrict access to Nvidia's cutting-edge AI chips, leaving domestic technology several years behind the global frontier.

Chinese tech giants are intensifying efforts to win the global AI race, with DeepSeek and Meituan MPNGY emerging as two of the country's strongest contenders against OpenAI, Microsoft MSFT, Alibaba BABA, and Tencent TCEHY.

DeepSeek is pushing an agent-focused AI model built to handle multi-step tasks autonomously, retain learning, and minimize user input. Founder Liang Wenfeng aims to launch commercially by year-end, following the R1 model's January debut that rivaled OpenAI at a fraction of the cost.

Meituan is betting on open source. The company rolled out LongCat-Flash-Chat, a 560-billion-parameter Mixture-of-Experts model designed for faster, cheaper inference, directly challenging Alibaba Cloud's Qwen ecosystem.

Beijing has also pushed local firms to avoid Nvidia's H20 processor—a downgraded product tailored for the Chinese market under U.S. export rules.

Wei urged China to build chips designed explicitly for large-model development rather than continuing to rely on GPU architectures intended initially for gaming and graphics.

Nvidia’s stock gained over 32% year-to-date, topping the NASDAQ Composite Index’s 14% returns. The chip designer continues to generate massive revenue from China as Alibaba, ByteDance, and Tencent hoard its AI chips.

Chinese firms ordered as many as one million H20 units—worth more than $16 billion in a single quarter—before fresh sanctions, with $17 billion of Nvidia's $18 billion H20 sales since 2025 tied to China. That equals 13% of its fiscal 2024 revenue.

To resume H20 shipments, Nvidia agreed to remit 15% of its China chip revenue to the U.S. government. Even so, Bernstein expects its China market share to slip to 55% this year from 66% in 2024.

Analysts see more upside ahead. Bank of America's Vivek Arya projects $6–$10 billion in potential China sales through January, though $3 billion–$4 billion could be delayed by supply constraints. CEO Jensen Huang has reassured Chinese buyers, calling China a $50 billion opportunity if Nvidia remains engaged in providing China with sanction-compliant offerings.

NVDA Price Action: NVIDIA shares were up 0.46% at $178.14 at the time of publication on Thursday. The stock is approaching its 52-week high of $184.48, according to Benzinga Pro data.

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