Nvidia Corp (NASDAQ:NVDA) could face challenges in the Chinese market as Huawei Technologies prepares to launch its new AI chip, the Ascend 910C.

This chip aims to fill the void left by Nvidia after U.S. export controls, implemented in 2022, prevented the company from offering its most advanced chips, like the H100, to Chinese customers.

If Huawei successfully produces the Ascend 910C and Nvidia remains restricted from selling its top-tier chips to China, Nvidia could see a rapid decline in its market share.

Industry analysts suggest that Huawei’s new chip may outperform Nvidia’s downgraded B20, which was designed to comply with U.S. export regulations. With orders for the 910C expected to reach over 70,000 units, valued at approximately $2 billion, Huawei is positioning itself as a formidable competitor.

Nvidia has maintained that the U.S. embargo on China has had no impact. The stock is up over 149% in the last 12 months, backed by its “walled garden” of developers who use its chips to build AI systems and other software. As Nvidia focuses on its coding expertise, it will likely maintain more leverage than its rivals.

Investors can gain exposure to Nvidia through SPDR Select Sector Fund – Technology (NYSE:XLK) and Vanguard Information Tech ETF (NYSE:VGT).

Price Action: NVDA shares traded higher by 5.05% at $114.53 at the last check on Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image via Nvidia Blog