Privately held Chinese tech conglomerate Huawei is reportedly building a new chip to rival Nvidia (NVDA 2.39%), which has long been considered the world's dominant artificial intelligence (AI) chipmaker.

However, export regulations dating back to 2022 have gradually curbed Nvidia's ability to sell its products to Chinese companies. Recently, the Trump administration informed Nvidia that it would need an export license to continue sending the chips it had been selling to China, effectively introducing another big road block for Nvidia in the Chinese market.

Nvidia will take a big charge in the quarter due to the license requirements and, in the near term, doing business in China is going to be a significant challenge, potentially presenting an opportunity for a domestic Chinese company to fill the void. Did Huawei just say "checkmate" to Nvidia?

What kind of chip is Huawei building?

The Wall Street Journal reported that Huawei is working on a product called the 910D chip, which the company is still testing. Huawei is supposedly preparing to send the chips out to several Chinese companies later this month.

The chip is intended to rival Nvidia's H100 Hopper chip, which is not the most advanced Nvidia chip, but certainly one of the more recent iterations. Hopper offers features such as faster AI training, real-time deep learning inference, high-performance computing, and accelerated data analytics.

Due to export restrictions that began during the Biden administration and continued to escalate in the Trump administration, Nvidia built a modified H100 chip called H20, which was less powerful than the H100 chips and specifically built to comply with export restrictions so it could be sold in China. Both the current and recent administrations have been concerned about how China might use the AI chips.

But despite efforts to stymie China's AI capabilities, the Chinese company DeepSeek developed a chatbot with similar capabilities to OpenAI's ChatGPT, supposedly using Nvidia's H800 chips. The H800 chips were one of the earlier chips Nvidia created to comply with some of the first Chinese export restrictions before those got banned due to new export restrictions. The H800 has more computing power than the H20, but less than the H100. So, if Huawei's 910D can truly rival Nvidia's H100 chip, that would give Chinese companies access to more powerful chips than they have been buying from Nvidia in recent years.

Can Huawei truly compete with Nvidia?

Right now, it doesn't seem like Huawei can compete with Nvidia's offerings. That doesn't mean Chinese AI companies like DeepSeek won't find ways to innovate with less, but Huawei's 910D chips will be hard-pressed to compete with the H100. The Journal reported that the 910D chips use more power and are less efficient than the H100 chips.

Richard Windsor, the founder of the research firm Radio Free Mobile, said in a research note that Huawei's chips are likely to stay limited in size to 7 nanometers. The trend in chips is to go smaller because smaller chips use less power, have better performance, and can pack more transistors onto a smaller surface area, typically leading to more processing power. Nvidia's H100 chip is only 4 nanometers.

"The net result is that I don't think that Huawei is going to be competing directly with Nvidia, and so concerns over substantial market-share loss are overblown, in my opinion," Windsor wrote.

Finally, the H100 is now considered an old model for Nvidia. The company already released its next-generation Blackwell chips, reporting overwhelming demand for the product earlier this year. Additionally, Nvidia is already planning to release new chip models in 2026 and 2028.

So, I don't think Huawei's new chip is checkmate for Nvidia. However, Huawei will have increased opportunities in China as long as these export restrictions stay in place, and China is a huge market for any tech or AI company.