Huawei Technologies and Cambricon Technologies, alongside Chinese internet giants building proprietary silicon, are on course to command nearly 80 per cent of China's domestic AI server chip market by the end of 2026, according to Taipei-based research firm TrendForce — a shift that further narrows the window for Nvidia, Advanced Micro Devices, and other foreign suppliers.

The market share breakdown

Domestic chip suppliers led by Huawei and Cambricon are projected to capture 56 per cent of China's AI server market in 2026, up from 46 per cent in 2025. Chinese internet companies deploying their own custom application-specific integrated circuits (ASICs) are expected to account for an additional 23 per cent, rising from 20 per cent the previous year.

Together, these two domestic segments would leave foreign vendors with just 21 per cent of the market — down sharply from 34 per cent in 2025 — as geopolitical restrictions continue to limit what Nvidia and AMD can legally sell into China.

Why it matters

The figures underscore how US export controls and Beijing's self-reliance push are reshaping the global semiconductor landscape at accelerating speed. Frank Kung, research manager at TrendForce, said at the firm's conference in Shenzhen on Tuesday, 24 June 2026 that the custom ASIC segment 'will continue to scale up' as geopolitical uncertainty and policy tailwinds sustain momentum.

For Nvidia, which has already seen its China-specific H20 chip face fresh licensing scrutiny, the shrinking addressable market represents both a revenue drag and a signal that Chinese customers are rapidly de-risking their supply chains.

The competitive backdrop

China's largest internet platforms — including cloud operators and AI model developers — are accelerating procurement of domestic processors from Huawei and Cambricon, reducing their historical dependence on imported GPUs. This demand-side pull is as significant as the supply-side investment, creating a self-reinforcing cycle that TrendForce says is structural rather than cyclical.

The ASIC segment is particularly telling: proprietary chips designed in-house by hyperscalers offer performance tuned to specific workloads and sidestep export-control risk entirely, making them an increasingly attractive alternative to merchant silicon from foreign vendors.

What's next

With domestic share expected to keep climbing, the critical variable is execution — whether Huawei's advanced packaging capabilities and Cambricon's software ecosystem can match the performance-per-watt benchmarks that enterprise AI workloads demand. Any further tightening of US chip restrictions would likely accelerate the timeline further, leaving foreign suppliers with an ever-smaller foothold in one of the world's largest AI infrastructure markets.