Geopolitical tensions between the U.S. and China are fueling a renewed wave of AI chip independence as Chinese vendors race to develop in-house application-specific integrated circuits (ASICs), according to new research from market research firm TrendForce.
Meanwhile, the AI server market in China is adjusting to new U.S. export controls coming from April 2025, which will reduce the share of imported chips from the likes of Nvidia and AMD from 63% in 2024 to about 42% in 2025, TrendForce forecasts.
Reducing reliance
Domestic Chinese chipmakers, such as electronics giant Huawei, are boosting their market share in AI chips to about 40% in the region, nearly on par with the imported chips expected this year. The Chinese government is fueling this growth through promoting polices for homegrown AI processors, TrendForce said.
The race to develop ASICs is expected to:
- Reduce reliance on Nvidia and AMD
- Bolster the Chinese supply chain
- Gain greater control over cost and performance
The race to develop AI chips in China comes after the Bureau of Industry and Security (BIS), part of the U.S. Department of Commerce, further curbed the use of Huawei AI chips with new restrictions.
Anyone using the devices will require a license to do so. Those who do not apply for a license will face criminal or administrative penalties.
Who’s building?
China’s main developers of AI chips for domestic needs include Huawei, whose semiconductors are the closet to rival those from Nvidia. The company, with support from domestic internet giants and DeepSeek’s LLM ecosystem, is best positioned to challenge the dominance of Nvidia in the AI server market with its Ascend AI chips.
Domestic Chinese vendor Cambricon is expanding its Siyuan chip series for AI training and inference in the cloud. The company is expected to ramp up deployment in 2025.
Other ASICs being developed include:
- Alibaba’s Hanguang 800 chip
- Baidu’s Kunlun III
- Tencent’s Enflame ASIC
All-in-all, this trend is expected to drive the global AI server market toward a bifurcated ecosystem — China for China and another outside of the region, TrendForce said.
