NVIDIA CEO Jensen Huang warned that Chinese tech giant Huawei will dominate China's AI market if the United States continues restricting access to advanced semiconductor technology. Speaking to CNBC at the Viva Technology conference in Paris on Thursday, Huang stated that while US technology remains "a generation ahead" of China's capabilities, Huawei stands ready to fill market gaps created by export restrictions.

"If the United States doesn't want to partake, participate in China, Huawei has got China covered, and Huawei has got everybody else covered," Huang told CNBC's Arjun Kharpal. The NVIDIA chief stressed that American technology developers need global access to maintain competitive advantage, warning that restricting Chinese AI researchers could ultimately benefit China's technology stack over America's.

Huawei's Production Limitations and US Export Controls

Despite Huawei's ambitions, US officials maintain that export restrictions are effectively limiting Chinese AI chip production. Reuters reported that Commerce Under Secretary Jeffrey Kessler told lawmakers Thursday that Huawei can produce no more than 200,000 Ascend AI chips in 2025. These chips will primarily serve companies within China as alternatives to NVIDIA's offerings.

Production challenges stem from manufacturing yield issues that plague Chinese chip fabrication. Reuters found that Huawei's latest Ascend 910C chip achieves only 20% yield rates when manufactured by Semiconductor Manufacturing International Corp using advanced processes. Commercial viability typically requires yields exceeding 70%, creating significant cost pressures.

The yield problems have forced Huawei to prioritize strategic government and corporate orders. TechCrunch reported that Huawei continues developing its Ascend 910D chip to rival NVIDIA's H100 series, but supply constraints limit mass deployment across China's AI ecosystem.

China's Domestic AI Chip Development Efforts

Chinese authorities have responded to export restrictions by accelerating domestic semiconductor investments. CSIS research shows that China launched a 300 billion yuan ($41 billion) semiconductor fund in 2023, building on previous 200 billion yuan ($27 billion) investments from 2019. These amounts exceed US and European semiconductor support programs.

Huawei CEO Ren Zhengfei acknowledged in June that Chinese chips remain "one generation behind" US technology, according to Reuters. However, he emphasized that China compensates through mathematical approaches, cluster computing, and non-Moore's law techniques. Huawei's AI CloudMatrix 384 system, linking 384 Ascend 910C chips, reportedly outperforms NVIDIA's GB200 NVL72 system on specific metrics.

China's broader AI ecosystem shows rapid progress despite restrictions. Foreign Policy analysis indicates that Chinese AI models now lag US counterparts by only three months in core technologies, with companies like DeepSeek demonstrating capabilities rivaling OpenAI at reduced computational costs and power requirements.

NVIDIA's Market Dominance and European Opportunities

NVIDIA maintains overwhelming control of global AI chip markets, with analysts estimating between 70% and 95% market share for AI accelerators. Reuters reported that NVIDIA's market value increased by over $2 trillion in 2024, reaching $3.28 trillion and making it the world's second-most valuable listed company.

During his European tour, Huang praised regional AI potential and announced investment commitments. At the Paris conference, he told CNBC that France could "export AI" alongside energy exports, viewing Europe as an independent market from China. European AI investment has surged, with the EU launching InvestAI to mobilize €200 billion for AI development, including €20 billion for AI gigafactories.

The European AI market reached €119.80 billion in 2025 and is projected to grow at 36.38% annually through 2033, according to Market Data Forecast. Germany leads regional adoption with 26.9% market share, while France shows the fastest growth at 35.5% annually as government programs support AI startup development.

Broader Implications for Global Tech Competition

The exchange reflects deeper tensions over AI technology leadership and market access. Recent US export controls create a three-tiered global system, with 18 close allies receiving unrestricted access, 120 countries facing quotas, and China, Russia, Iran, and North Korea blocked entirely. The Washington Post reported these restrictions affect mainstream computing worldwide while potentially pushing countries toward alternative technologies.

Industry experts warn that overly restrictive policies could backfire by fragmenting global AI development. ITIF analysis suggests that cutting US companies from Chinese markets may ultimately harm American national security and economic interests. China's rapid AI progress, demonstrated by models like DeepSeek-R1, shows the country's ability to innovate despite technology constraints.

Huang's comments about technology stacks reflect this competition. He emphasized that global AI developer adoption determines which technological foundation becomes dominant. If Chinese researchers build primarily on domestic technology stacks due to access restrictions, China's approach could gain international acceptance and reduce American influence over global AI development standards.

The outcome may determine whether technological bifurcation continues or whether new collaborative frameworks emerge. With both sides investing heavily in AI capabilities, the next few years will likely define the global AI landscape for decades.

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