Nvidia stock drops as Huawei unveils rival AI chip threat

Nvidia’s Stock Decline Overview

Nvidia’s shares dropped by 4% on 28 April 2025 in response to news that
Huawei plans to test a new advanced
artificial intelligence processor. This further compounds an approximate 20% decline since the beginning of 2025.

Heightened investor anxiety stems from overlapping market forces, including reduced chip exports to China and
intense competition in Nvidia’s core market.
Earlier in January, a staggering $600 billion in market capitalisation was wiped out following reports of
DeepSeek releasing AI models to rival
OpenAI’s ChatGPT at significantly lower costs.

Huawei’s AI Chip Competition

Huawei’s latest Ascend 910D processor is reported to target the high-end AI chip segment traditionally dominated by Nvidia.
According to The Wall Street Journal,
Huawei has already shipped over 800,000 units of older Ascend models to
ByteDance and other major Chinese tech giants,
signaling a rapidly escalating race for AI chip supremacy.

By intensifying custom chip development and forging strategic alliances, Huawei demonstrates a concerted
push to outperform Nvidia’s H100 in the lucrative data center market. This marks another milestone in the
ongoing competition between China’s leading semiconductor firms and established U.S. players.

Impact on the Semiconductor Market

The entire semiconductor sector has faced downward pressure due to geopolitical tensions, shifting supply chains,
and fierce competition for AI-related chip contracts. With Huawei’s expanded challenge,
concerns grow over further GPU market share erosion for Nvidia.

Such developments point to a future where major navigation points of the industry may revolve around custom AI designs,
particularly as data centers demand more specialized chips for concise tasks.
Market watchers note that while established players still command a large share, new entrants are
capitalizing on advanced manufacturing and engineering capabilities to disrupt the ecosystem.

Effects on Nvidia’s Business & Revenue

U.S. export restrictions and mounting competition have experts projecting as much as a $16 billion reduction in
Nvidia’s total annual revenue. Already, the company has announced an expected $5.5 billion charge
related to restricted H20 chip sales to China.

As interest in AI soars internationally, Nvidia finds itself juggling demand from global customers who fear
potential supply constraints. With less free rein to sell to China, the company may need to deepen partnerships in
other regions while accelerating research and development to stay ahead of rapidly evolving competitors.

Broader Market Implications

Long-standing supply chain complexities, heightened trade barriers, and tightening regulations around high-tech
exports contribute to ongoing uncertainty. The U.S. government’s investigation into AI chip
transfers used in China indicates further potential challenges for Nvidia. Meanwhile, the possibility of
OpenAI developing custom chips adds another layer of competition in the workflow accelerator market.

Investors tracking AI chip developments should consider how swiftly upstarts can match or surpass established GPUs.
Central to that puzzle is TSMC’s manufacturing prowess, on which both Huawei and Nvidia still rely.
Any disruption in chip foundries can reverberate globally, further constraining supply and influencing prices.

Conclusion

Nvidia’s notable stock decline, triggered by Huawei’s AI chip announcement, underscores the delicate balance of
market forces and geopolitical factors shaping the semiconductor landscape. This turbulence presents both
opportunities and risks as investors weigh the future of high-performance computing solutions.

Ultimately, Nvidia’s response in forging new partnerships and accelerating innovation may define its resilience.
As global AI chip players aggressively strive for an edge, the stakes for market leadership and technology
breakthroughs have never been higher.