Nvidia Loses $1 Trillion as China Shifts AI Chip Spending to Domestic Suppliers
Nvidia’s shares declined on Monday after a Bloomberg Intelligence survey showed that Chinese technology companies plan to allocate 46% of their AI accelerator budgets to domestic chips over the next 12 months. Currently, local chips account for 30% of those budgets. As a result, the findings highlight how growing U.S.-China tensions continue to reshape the global AI semiconductor market.
Chinese Chipmakers Gain Momentum
The Bloomberg Intelligence survey revealed a 16-percentage-point increase in planned spending on locally produced AI chips within a year. Meanwhile, Chinese authorities have effectively restricted the use of Nvidia’s H20 chip and discouraged domestic companies from purchasing U.S.-made AI accelerators.
Last year, Nvidia CEO Jensen Huang acknowledged the company’s shrinking presence in China. “At the moment, we are 100% out of China,” Huang said during an appearance at Citadel Securities’ Future of Global Markets event in October 2025.
Furthermore, analysts at Bernstein expect Nvidia’s share of China’s AI semiconductor market to fall to around 8% in 2026 from roughly 40% a year earlier. At the same time, Huawei’s market share could exceed 50%.
Stock Value Drops as Sales Slow
Nvidia has lost about $1 trillion in market value in less than two months. Additionally, its stock has fallen 16% since reaching a record high on May 14, leaving the company’s valuation at its lowest level since before the AI boom.
Although the United States approved sales of Nvidia’s H200 chips to around 10 Chinese companies in May, the move has not generated significant orders. Instead, many Chinese businesses have delayed purchases after receiving guidance from Beijing.
Moreover, companies including ByteDance are reportedly exploring AI inference chips from domestic suppliers such as Iluvatar CoreX and Baidu’s Kunlunxin division.
Rising Domestic Investment Creates Long-Term Challenge
The survey also found that 80% of Chinese executives reported infrastructure spending exceeding budget this year because of AI-related investments. Consequently, many companies have accelerated efforts to source technology from domestic suppliers.
The strategy supports Beijing’s objective of securing at least 80% of its core technologies, including semiconductors, from local companies. For Nvidia, which once generated about $17 billion in annual revenue from China, the transition represents a significant long-term challenge.
