Nvidia Corp (NASDAQ:NVDA, ETR:NVD) shares were down 3.5% on Monday afternoon after news that China’s Huawei Technologies is preparing to test a new high-end artificial intelligence chip aimed at rivalling Nvidia’s flagship products.
Huawei is preparing to sample its Ascend 910D AI chip in May, aiming to match or outperform Nvidia’s H100, according to reports.
Analysts at Wedbush said it expects Huawei’s latest artificial intelligence chip to face challenges competing directly with Nvidia’s leading products.
Huawei is still reliant on SMIC’s 7nm process technology, which could limit the chip’s competitiveness against Nvidia’s more advanced offerings, according to Wedbush.
While improvements in chip design, software, and system architecture can help boost AI performance — as seen with companies like Groq and DeepSeek — Wedbush said it remains difficult to overcome the advantages of more advanced semiconductor manufacturing nodes, especially as those advantages compound over time.
“While we believe Huawei's advances are important and could position the company to compete beyond China (particularly if the US limits AI shipments to certain geographies), we also expect Huawei will have a difficult time competing head-to-head with NVDA until/unless China can resolve the gap in semi cap capabilities,” analysts wrote.
Ultimately, Wedbush said Huawei’s advances are significant and could help the company expand its AI footprint beyond China, particularly if US export restrictions tighten.