China's Domestic AI Chips Set to Capture 90% of High-End Market, Squeezing Nvidia to Single Digits
TrendForce's dramatic eight-month revision—from 50% to nearly 90%—signals a structural, not cyclical, shift in China's AI semiconductor landscape, with Nvidia's market share projected to collapse from 40% to roughly 8% by year-end.
The revision is striking in its speed. In December 2025, TrendForce estimated domestic AI chips would hold approximately 50% of China's high-end accelerator market in 2026, with Nvidia, Advanced Micro Devices (AMD), and other imported solutions retaining around 30%. By August 10, 2026, that forecast had been overhauled: domestic solutions are now expected to command close to 90%, leaving foreign vendors with roughly one-tenth of a market growing at more than 83% year-on-year in unit shipments.
Investment bank Bernstein corroborates the directional shift, independently projecting Nvidia's share of China's AI semiconductor market will fall from approximately 40% in 2025 to around 8% in 2026, while Huawei alone could exceed 50%.
Two Domestic Supply Lanes Emerge to Absorb Surging Demand
The structural driver is not policy alone—it is arithmetic. China's National Data Administration disclosed that the country's intelligent computing capacity reached 1.59 million PFLOPS by end-2025, expanding further to 1.88 million PFLOPS by March 2026. At that growth rate, relying on foreign GPU imports to cover incremental demand has become operationally untenable, irrespective of export-control constraints.
TrendForce identifies two parallel domestic supply tracks forming to absorb this demand. The first runs through dedicated AI accelerator chip vendors: Huawei and Cambricon are scaling shipments of their respective Ascend and MLU product lines. Reuters previously reported Huawei plans to ship approximately 750,000 Ascend 950 Pro AI accelerators in 2026—a volume figure that, if realized, would itself account for a meaningful share of total high-end AI chip deployments in China.
The second track runs through hyperscaler-designed ASICs (application-specific integrated circuits). Alibaba, Baidu, and Tencent are each accelerating proprietary chip programs, internalizing silicon development to reduce dependency on any single third-party vendor—domestic or foreign.
IDC data illustrates how quickly the supply mix has shifted: in the first half of 2025, domestic chip brands accounted for approximately 35% of AI accelerator chips deployed in China's accelerated server market, with total AI accelerator chip usage exceeding 1.9 million units. By full-year 2025, domestic AI accelerator card shipments reached approximately 1.65 million units, representing 41% of the domestic market—a trajectory that underpins TrendForce's 90% projection for 2026.
Software Ecosystem Closes the Final Gap Against Nvidia's CUDA Moat
Hardware availability has historically been the easier problem to solve. The deeper competitive barrier Nvidia maintained in China was not the GPU itself but the CUDA software ecosystem—years of accumulated model libraries, operator kernels, and developer toolchains that made migration to alternative hardware prohibitively expensive in engineering time.
That moat is narrowing faster than most analysts anticipated. Following the release of DeepSeek V4, at least eight domestic AI chip vendors publicly announced compatibility solutions. When the subsequent V4 Flash variant launched, more than 100 enterprises achieved Day-0 integration within days, spanning chip vendors, inference frameworks, and model developers in a coordinated compatibility chain that would have been structurally impossible 18 months ago.
The implications for enterprise procurement decisions are direct. Meituan disclosed that its LongCat-2.0 model was trained and deployed entirely on domestic compute, with training peak utilization exceeding 50,000 domestic accelerator cards—a public validation from a Tier-1 internet company that domestic silicon can now support frontier-scale workloads end-to-end.
Capital Expenditure Surge Locks In Domestic Chip Demand Through 2026
The demand side shows no sign of deceleration. TrendForce forecasts that combined capital expenditure by ByteDance, Tencent, Alibaba, and Baidu will grow more than 80% year-on-year in 2026, with the bulk directed toward AI data centers and compute infrastructure. At that spending velocity, procurement decisions made now will define supplier market share for the next two to three years—creating durable revenue visibility for domestic chip vendors even before performance parity with leading foreign alternatives is fully achieved.
Nvidia's China Pivot Hits a Diminishing-Returns Problem
Nvidia is not exiting China passively. TrendForce reports the company is preparing a China-specific variant of the RTX Pro 5000, equipped with GDDR7 memory, to complement the previously introduced RTX 6000D—both products engineered to comply with U.S. export restrictions through performance de-rating.
The strategic problem is that the value proposition of a deliberately constrained chip erodes precisely as the domestic alternative supply chain matures. When domestic chips were scarce and software ecosystems fragmented, a de-rated Nvidia product still offered a meaningful capability premium. As domestic chip volumes scale toward the 90% market-share threshold TrendForce now projects, and as software compatibility chains compress from months to days, the addressable use case for a performance-limited foreign chip narrows to niche workloads where specific legacy software dependencies remain.
For Nvidia, the China AI accelerator market—once among its highest-growth geographies—is transitioning from a share-defense problem to a structural exit question.
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