NVIDIA, the world’s leading AI chipmaker, is facing mounting headwinds in China as domestic giants Alibaba and Baidu accelerate adoption of their own in-house processors. This strategic shift reflects both U.S. export restrictions on advanced semiconductors and Beijing’s growing mistrust of foreign technology in critical sectors.
China’s government has encouraged tech companies to reduce dependence on U.S. hardware, citing national security and supply chain resilience. Alibaba’s custom chips are now powering smaller AI models with performance nearing NVIDIA’s H100, while Baidu is training its Ernie AI model on its latest Kunlun P800 chip. Although there is no official ban on NVIDIA hardware, industry insiders note a quiet sidelining, as Chinese firms prioritize self-reliance.
The U.S., meanwhile, continues to tighten controls on chip exports, limiting China’s access to cutting-edge GPUs. A recent agreement under the Trump administration allowed limited sales in exchange for revenue guarantees, but it has done little to reverse the trend.
For NVIDIA, the risk lies in losing its largest overseas market, while for China, the pivot accelerates domestic innovation. Both sides frame the shift as pragmatic: the U.S. restricts sales, and China avoids purchases—a “win-win” decoupling that underscores the deepening battle for global AI supremacy.
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