Nvidia was just settling down on its AI throne when Huawei decided to enter the party, not only chips but an entire buffet was being served. As the tech titans battle it out for tech supremacy, investors are now wondering whether the road ahead might soon get a little bumpy. In premarket trading on Monday, Nvidia’s shares fell as much as 1.4% to $109.48 after the stock posted a gain of 4.3% on Friday. It has further reported that Huawei Technologies developed a new AI chip, Ascend 910D, which may be a big competitor in the Chinese market.

As reported by The Wall Street Journal, Huawei has reached out to a few Chinese tech companies to conduct tests on the 910D chip, with the goal of surpassing Nvidia’s H100. Nvidia has moved beyond H100 with the Hopper and Blackwell series, but export controls would bar it from selling its most powerful AI hardware to Chinese companies. As the report continued, Huawei has already started shipping large quantities of its Ascend 910B and 910C chips to its major Chinese clients, such as ByteDance and state-owned telecom operators.

Competition in the Chinese Market

Nvidia’s exposure to China keeps dwindling bit by bit, but is still significant. By fiscal 2025, revenues from China’s contribution were only 13% of Nvidia’s sales as opposed to 26% recorded during fiscal 2022. It is not so clear about future growth prospects in this region, especially after the announcement of further licensing by U.S officials regarding sales of H20 AI accelerators from Nvidia.

Independent analyst Richard Windsor of Radio Free Mobile wrote,

“The only real threat that I see to Nvidia here is in China where the state’s control over the private sector may ensure a switch away from Nvidia’s CUDA [software] with developers learning how to use Huawei’s development platforms instead.”

Outside China, threats from Huawei tend to be rather subdued, seeing that it is chasing behind Nvidia’s edge technology.

xAI’s Expansion

In a rather pleasant piece of news, xAI which is a venture owned by Elon Musk, may soon begin the rounds on raising an amount of $20 billion in new funding that might be seen by many as atrocious, according to Bloomberg. The company has been spending a lot of its money to get Nvidia’s AI chips which, according to its investments, power its data centers. This means that if the round is going to be successful, then there would be more sales of hardware by Nvidia. Under the current circumstances, the chip sector has also taken a toll. AMD dipped by 1.1% and Broadcom by 1.2%, both in premarket trading alongside Nvidia.

As the Huawei invasion surprises the Chinese market, Nvidia’s stronghold of global acknowledgement has not been threatened yet. On the other hand, as new export restrictions become tighter, and the craving for homegrown tech grows in China, Nvidia cannot afford to rely on its prior achievements. Innovation, geopolitical agility, and strategic diversification will be of utmost importance if it hopes to remain ahead in the world’s fiercest tech race.