Recently, Nvidia’s CEO, Jensen Huang, warned that China is not far behind the United States in terms of artificial intelligence (AI) development. He argues that the nation is “very, very close” behind. As the race to scale and improve AI technology rages on, Huang feels that China has made unprecedented progress and could soon rival US products and hardware.

Nvidia as an AI Leader and Its Competition

While most might know Nvidia as a company geared toward developing graphics hardware for gaming, it has recently positioned itself as a leader in AI chip production. The company’s H200 graphics cards are used to power some of the world’s most advanced AI models, but Chinese companies like Huawei are working to catch up. 

The Chinese AI startup DeepSeek has already shocked US AI companies, and Nvidia’s CEO suggests that these companies will be working on hardware next.

“There’s no question that Huawei is one of the most formidable technology companies in the world, Huang shared with Business Insider, “and they’re incredible in computing… networking technology, and software capabilities—all of these capabilities to advance AI they have. They’ve made enormous progress in the last several years.”

China’s Remarkable Growth in AI

Chinese AI development has already surpassed global expectations, leading the US to restrict the sale of AI chips to the country. The US restricted sales of Nvidia’s China-specific H20 GPUs to limit China’s potential for growth, but this may have created new problems for American companies. The decision to restrict the sale of AI chips to China means that the nation’s tech giants must fill the gaps.

Huawei as a Standout Competitor

Huawei, the Chinese telecoms company, is spearheading these developments. Huawei is already producing its own AI hardware, with its CloudMatrix 384 system released this year. Supposedly, this system will be capable of competing with Nvidia’s existing GPUs in terms of performance. If this proves true, Chinese AI companies won’t rely on American chips any longer.

Although both Huawei and other Chinese companies are rapidly developing AI technology, analysts suggest that a lack of established software ecosystems could restrict growth. The AI chips produced by Huawei and other Chinese companies likely lack solutions akin to Nvidia’s Compute Unified Device Architecture (CUDA), allowing easy software integration. This restriction on scalability would be detrimental to China’s AI development, even if its hardware is as capable as Nvidia’s own.

“It’s important to remember,” Extreme Tech’s Jon Martindale pointed out, “that the job of CEOs such as Huang… is to generate profit for their investors. That happens for Nvidia if it sells more GPUs, or if companies invest in ChatGPT, which may be more likely if Western companies feel China is poised to outcompete them. That’s not to say China isn’t developing AI hardware… but Nvidia’s goals with announcing this are unlikely to be altruistic.”

A Race in AI Innovation

It is all but sure that Huang is looking to drum up support for Nvidia and other American tech companies, but China has demonstrated legitimate capability in the AI space. Whether the CloudMatrix 384 system proves an effective competitor to Nvidia’s H200 remains to be seen, but the race to dominate in AI innovation is hardly slowing down.