China's AI Chip Ambition: Investment Opportunities in the Post-Nvidia Era

The Strategic Shift: From Dependency to Self-Reliance

China's push for AI chip self-reliance has accelerated dramatically in 2025, driven by U.S. export restrictions and the urgent need to secure its AI-driven economy. According to a report by Rest of World, Chinese startups and tech giants are now racing to replace Nvidia's dominance, with companies like Cambricon, Moore Threads, and Biren Technology leading the charge Full Stack: China's Evolving Industrial Policy for AI | RAND^[1]. This shift is not merely a response to geopolitical tensions but a calculated move to build a resilient domestic semiconductor ecosystem.

The Chinese government has embedded this ambition into its 2030 industrial policy, allocating $55 billion in 2025 for R&D in semiconductors, AI, and quantum computing China to spend $55 billion on R&D in 2025 — Semiconductor, AI and quantum computing fields to benefit^[5]. A key policy mandate requires state-owned data centers to source over 50% of their computing chips domestically China mandates more domestic AI chips for data centres to cut reliance on US tech^[3], creating a captive market for local producers. This policy, combined with corporate-backed funding surges—42 venture capital rounds in February 2025 alone—has fueled a "gold rush" for AI chip startups Full Stack: China's Evolving Industrial Policy for AI | RAND^[1].

Leading the Charge: Domestic Innovators and Their Breakthroughs

Huawei's Ascend Series: Huawei remains the market leader, with its Ascend 910B already in use and the upcoming Ascend 910C poised to rival Nvidia's H100. The company's vertically integrated supply chain and partnerships with Chinese cloud providers give it a unique edge Chinese corporations ramp up investments in AI and chips startups^[2].

Cambricon's Turnaround: Once a U.S.-blacklisted firm, Cambricon reported a record $144 million profit in H1 2025, driven by demand for its 7-nanometer Siyuan 590 AI chip Full Stack: China's Evolving Industrial Policy for AI | RAND^[1]. Its market value doubled to $80 billion, reflecting investor confidence in its ability to scale production and secure government contracts Chinese corporations ramp up investments in AI and chips startups^[2].

Biren Technology and Moore Threads: Biren's BR100 GPU, launched in 2022, claims parity with Nvidia's H100, while Moore Threads' GPUs match the performance of older RTX 3090/4090 models Full Stack: China's Evolving Industrial Policy for AI | RAND^[1]. These firms are leveraging ex-Nvidia talent and state-backed R&D to close the gap in advanced node production.

Financial Momentum and Market Projections

The Chinese AI chip market is projected to grow from $8.17 billion in 2025 to $31.16 billion by 2030, with a 30.69% CAGR Full Stack: China's Evolving Industrial Policy for AI | RAND^[1]. This growth is underpinned by corporate investments: Tencent, Baidu, and Alibaba are collectively spending $32 billion on AI in 2025 Chinese corporations ramp up investments in AI and chips startups^[2]. Startups like Silang Technology, which designs chips for high-performance computing, have secured funding in a sector that saw a two-year high in venture capital activity Full Stack: China's Evolving Industrial Policy for AI | RAND^[1].

Government support is equally critical. The National Integrated Circuit Investment Fund and an $8.2 billion AI startup fund are directing capital toward domestic production, while local governments are establishing AI labs and talent pipelines Full Stack: China's Evolving Industrial Policy for AI | RAND^[1].

Challenges and Risks

Despite this momentum, hurdles remain. U.S. export controls on advanced manufacturing equipment and EUV lithography technology have forced Chinese firms to rely on older DUV processes, limiting efficiency Chinese corporations ramp up investments in AI and chips startups^[2]. Additionally, commercial adoption beyond state-owned enterprises remains limited, with private-sector partnerships still in early stages Full Stack: China's Evolving Industrial Policy for AI | RAND^[1]. Analysts warn that only the top three firms—Huawei, Cambricon, and Biren—may survive the intense competition Full Stack: China's Evolving Industrial Policy for AI | RAND^[1].

Investment Thesis: Navigating the Opportunities

For investors, the Chinese AI chip sector offers high-reward opportunities but requires a long-term horizon. Key considerations include:
1. First-Mover Advantage: Huawei and Cambricon's established market positions and government contracts make them strong candidates for sustained growth.
2. Policy-Driven Demand: The 50% domestic chip mandate for state data centers ensures a baseline of demand, even if private-sector adoption lags.
3. Innovation Leverage: Startups like Moore Threads and Biren Technology could disrupt the market if they secure breakthroughs in packaging or design tools China to spend $55 billion on R&D in 2025 — Semiconductor, AI and quantum computing fields to benefit^[5].

However, geopolitical risks—such as further U.S. sanctions or trade wars—could destabilize the sector. Diversifying investments across firms with complementary strengths (e.g., Huawei's infrastructure, Cambricon's AI-specific chips) may mitigate this risk.

Conclusion

China's AI chip industry is at a pivotal inflection point. While challenges like EUV lithography bottlenecks persist, the combination of state support, corporate investment, and strategic innovation is creating a fertile ground for domestic champions. For investors willing to navigate the risks, this sector represents a compelling opportunity to capitalize on the next wave of global AI advancement.