Huawei's AI Chip Threat: Why Nvidia's Stock Is in a Tailspin

The U.S.-China tech war is entering a new phase, and this time it’s about artificial intelligence. Sources confirm that Huawei is set to begin mass shipments of its Ascend 910C AI chip in China as early as May 2025—a move that’s already sent Nvidia’s stock reeling. The 910C, designed to rival older U.S. chips like the Nvidia H100, is a direct response to export restrictions that have cut off Chinese companies from advanced American semiconductor technology.

The 910C: A Game-Changer for China’s AI Ambitions

Huawei’s new chip combines two of its older Ascend 910B processors into a single package, achieving performance comparable to the H100—Nvidia’s 2022 flagship chip that’s now two generations behind its latest Blackwell (B200) offering. While the 910C lags in raw compute power (about 60% of the H100’s inference capabilities), it’s designed to fill the vacuum left by U.S. export bans on newer models like the H20 (a China-specific variant of the H100).

The chip is manufactured by SMIC, China’s largest chipmaker, using a 7nm process. Despite U.S. sanctions limiting access to advanced equipment, SMIC has improved its yield rate to 40% in 2025—up from 20% in 2024—marking the first time the Ascend line turned profitable. Huawei aims to boost this to 60%, but SMIC’s reliance on older DUV lithography (vs. U.S.-controlled EUV tools) means it still trails Taiwan’s TSMC in efficiency.

Why This Matters for Nvidia’s Bottom Line

The 910C’s rollout has already triggered a 5.5–7% drop in Nvidia’s stock since April 2025, pushing shares below $900—a 28.5% year-to-date decline. The sell-off stems from two critical factors:

1. Lost Revenue in China:
2. China accounts for 13% ($17 billion) of Nvidia’s annual revenue. The U.S. ban on the H20 chip forced the company to write off $5.5 billion in Q1 2025, with total losses for the year projected to hit $16 billion (per JPMorgan).

4. Competitor Gains:

5. Huawei’s 910C is now the “hardware of choice” for Chinese AI developers, per analyst Paul Triolo of Albright Stonebridge. The chip’s availability ensures China’s AI ecosystem won’t collapse despite U.S. sanctions.

The Bigger Picture: A Tech Decoupling

The U.S. export restrictions, while intended to curb China’s AI capabilities, have backfired. Huawei’s progress highlights a geopolitical paradox:
- Supply Chain Loopholes: Huawei reportedly sources some components from TSMC via shell companies, circumventing U.S. rules.
- Self-Sufficiency Push: China’s AI chip market is now 75% dominated by domestic players (Huawei, Cambricon), with Cambricon’s shares soaring 400% in 12 months.
- Long-Term Risks for U.S. Tech: Analysts warn that sustained sanctions could cede global AI leadership to China, as Beijing invests heavily in algorithmic efficiency and alternative chip architectures.

Risks Ahead: Huawei’s Hurdles and Nvidia’s Comeback?

Huawei isn’t without vulnerabilities:
- Memory Constraints: Chinese firms still can’t produce high-bandwidth memory (HBM) needed for advanced AI chips, forcing reliance on foreign suppliers.
- Performance Gaps: The 910C can’t match Nvidia’s latest Blackwell chips, which are 3x faster in training large AI models.

Nvidia’s CEO, Jensen Huang, is aggressively lobbying U.S. policymakers to ease restrictions, while investing $500 billion in domestic AI infrastructure. Yet, with the Biden administration’s AI Diffusion Rules (effective May 2025) further tightening chip exports, the path forward remains fraught.

Conclusion: A New Era of Tech Rivalry

Huawei’s 910C marks a critical turning point. It’s not just a chip—it’s a symbol of China’s resolve to reduce reliance on U.S. tech. For investors, the implications are stark:

• Nvidia’s stock faces sustained pressure as it loses Chinese market share and grapples with write-offs. The company’s 2025 revenue loss ($16 billion) could erase years of growth.
• China’s AI ecosystem is thriving: Even with manufacturing constraints, domestic players like Huawei are scaling rapidly. SMIC’s 40% yield on the 910C—and plans to produce 100,000 units by year-end—signal a structural shift.

The bottom line: This isn’t just a stock dip—it’s a geopolitical realignment. Investors betting on U.S. tech dominance must now confront the reality of a world where China’s AI ambitions are no longer easily contained.