Huawei has announced groundbreaking AI software that could double the efficiency of its Ascend chips. This is a significant step in the context of export restrictions to China and geopolitical tensions, as it allows the Chinese manufacturer to maximize the use of its available hardware resources. The "software-first" strategy enables Huawei to scale existing chips through clustering and software optimization, enhancing the company's competitiveness in AI, including cloud and inference applications.
Until now, Nvidia has been the virtually undisputed leader in the Chinese AI chip market, offering the highest computational power and a well-established developer ecosystem. However, the increasing efficiency and scalability of Ascend chips, combined with state support for the Chinese producer, are beginning to shift the dynamics of competition. Huawei is gaining adoption among major cloud companies in China and steadily increasing production of its chips, which in the longer term could limit Nvidia’s previously dominant position in the region.
It is worth noting that although Nvidia still dominates globally, the Chinese market is becoming increasingly difficult to maintain without local partners or appropriate strategic adaptations. The efficiency and scalability of Ascend chips, combined with growing demand from local customers, could in practice take away part of Nvidia’s market share in China, particularly in inference and cloud AI segments. For Nvidia, this means closely monitoring local developments, adjusting pricing and technology strategies, and facing the potential risk of losing its competitive edge in a key Asian region.
Currently, the AI technology boom appears to be at a crossroads. Markets are cautious about technology company valuations, while the rapid pace of innovation and rising competition in China are adding further volatility. In this context, Huawei may set new standards and accelerate local AI adoption, which on one hand intensifies competition, and on the other highlights that Nvidia can no longer treat the Chinese market as a fully secure space for its growth.
In practice, the question of whether Nvidia is losing the Chinese market is no longer theoretical. The growing influence of Huawei and other local players demonstrates that even global leaders must account for regional shifts in power, as the AI market in China becomes an arena of increasingly fierce competition.
Morning Wrap (18.11.2025)
Daily summary: Risk assets keep sliding on US rate cut jitters (17.11.2025)
Soybean at 15-month high on USDA report and US-China trade optimism 📈 🫛
Quantum Computing after Earnings: Quantum Breakthough?
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
