China’s Domestic AI Chips Could Capture Nearly 90% of High End Market in 2026

China’s push toward semiconductor independence could dramatically reshape its high end artificial intelligence accelerator market in 2026, with domestic solutions expected to capture nearly 90% of shipments while NVIDIA and AMD are left with a combined share of approximately 10%. According to new supply chain analysis from TrendForce, shipments of high end AI chips inside China are projected to increase more than 83% year over year as government policy, rapidly expanding domestic semiconductor production, and continued uncertainty surrounding access to advanced American GPUs accelerate local adoption.

The shift represents an extraordinary change from 2025. IDC data reviewed by Reuters showed that Chinese GPU and AI accelerator manufacturers captured approximately 41% of the domestic market last year. NVIDIA still controlled around 55% after shipping approximately 2.2 million accelerator cards, while AMD held roughly 4%. Chinese suppliers collectively shipped around 1.65 million units, led by Huawei with approximately 812,000 accelerators, followed by Alibaba’s T Head with 265,000 and Baidu’s Kunlunxin and Cambricon with approximately 116,000 each.

TrendForce now expects that balance to shift considerably faster during 2026. China is increasingly developing a dual structure built around domestic GPUs from companies including Huawei and Cambricon alongside proprietary ASIC accelerators developed by major technology companies such as Alibaba, Baidu, and Tencent. Government support for domestic hardware is also being accompanied by improvements across advanced foundry processes, packaging, thermal management, and complete rack scale AI systems, reducing the country’s reliance on imported GPU platforms.

Huawei has emerged as one of the largest beneficiaries of that transition. Huawei’s rapidly expanding AI chip business, the company expects AI accelerator revenue to reach approximately 12 billion dollars during 2026, representing around 60% growth from 2025. Huawei’s rise is being accompanied by increasingly serious competition from Alibaba, Cambricon, Kunlunxin, Hygon, MetaX, Iluvatar CoreX, and other domestic semiconductor companies attempting to capture the opportunity created by China’s localization strategy.

China’s domestic semiconductor industry still faces substantial technical constraints. Advanced manufacturing yields, access to leading semiconductor equipment, HBM availability, packaging capacity, and software maturity remain important limitations. DigiTimes estimates that Chinese manufacturers could ship around 2.123 million high end cloud AI accelerators during 2026, an increase of approximately 136% year over year, but expects their global market share to remain around 13% because NVIDIA continues to hold a major advantage through CUDA, advanced manufacturing access, and its established international AI infrastructure ecosystem.

NVIDIA is not abandoning China. TrendForce says the company is preparing a China focused RTX PRO 5000 solution using GDDR7 memory, while the possibility of H200 shipments remains dependent on regulatory developments. However, even if additional NVIDIA hardware becomes available, China’s domestic substitution strategy has already created a market where local accelerators are becoming increasingly important for government, cloud, and enterprise deployments.

The most significant part of this forecast is not simply NVIDIA losing market share. China is building an increasingly complete parallel AI hardware ecosystem.

In 2025, domestic accelerators represented approximately 41% of China’s market. If TrendForce’s nearly 90% projection materializes in 2026, the transition would represent one of the fastest semiconductor localization shifts the industry has seen. Export restrictions undoubtedly accelerated the process, but Huawei, Alibaba, Cambricon, Baidu, and other companies are now investing heavily enough that domestic AI hardware could remain strategically important even if access to American accelerators improves.

NVIDIA still possesses enormous advantages in performance, CUDA software, networking, and global deployment. China does not necessarily need to replicate those strengths immediately, however. If domestic suppliers can provide sufficient performance at massive scale while building their own software ecosystems, the country can progressively reduce dependence on NVIDIA and AMD inside one of the world’s largest AI markets.

If Chinese AI accelerators capture nearly 90% of the domestic market in 2026, do you think NVIDIA can eventually recover its position in China, or has the localization shift already become permanent?