Nvidia shares fell 3% on Monday after reports surfaced that Chinese tech giant Huawei is developing a new advanced AI chip, intensifying concerns about U.S. semiconductor dominance and the future of American tech exports to China. The news sent ripples across the U.S. tech sector, with investors reassessing the competitive landscape and the impact of ongoing trade restrictions.
The catalyst for the selloff was a report indicating that Huawei is preparing to launch the Ascend 910D AI chip, which aims to rival Nvidia’s high-end H100 models. This development comes in direct response to the Trump administration’s tightening of export controls, which have barred Nvidia from selling its most advanced AI chips, including the H20 and H100, to Chinese customers.
According to industry sources, Huawei has already begun evaluating the new chip with several major Chinese firms and plans to ramp up shipments of its current 910C model to domestic clients as early as next month.
Analysts warn that Huawei’s push into AI chip development could pose a significant threat to Nvidia’s market share in China, a region that accounts for a substantial portion of the company’s annual revenue.
The U.S. government’s export restrictions have not only limited Nvidia’s ability to serve Chinese customers but have also accelerated China’s drive for self-sufficiency in critical technologies.
Piper Sandler analysts noted that even without the export ban, Huawei’s 910C and upcoming 910D chips would provide Chinese firms with a viable domestic alternative, reducing their reliance on U.S. technology.
The broader U.S. tech market felt the impact as well, with other semiconductor stocks, including AMD and Qualcomm, also trading lower. The sentiment reflects growing investor anxiety over the long-term implications of the U.S.-China tech decoupling, as Chinese companies like Huawei and Cambricon rapidly expand their capabilities in AI hardware.
Some analysts caution that continued export restrictions could inadvertently accelerate China’s progress, potentially eroding the global leadership position of U.S. firms in AI and semiconductor innovation.
For Nvidia, the immediate challenge is managing the financial fallout from lost Chinese sales, with estimates of up to $16 billion in annual revenue at risk. The company’s ability to innovate and diversify its customer base outside China will be crucial as the competitive and regulatory environment evolves.
As the U.S.-China tech rivalry intensifies, Nvidia’s stock volatility underscores the high stakes for American tech giants navigating a rapidly shifting global landscape.