Chinese artificial intelligence chip designers are forecasting impressive earnings in the upcoming quarter, driven by a national strategy to shift away from U.S.-made components. Companies such as Cambricon Technologies Corp. and Shanghai Iluvatar CoreX Semiconductor Co. are on track to report notable revenue gains. Moore Threads Technology Co., a company based in Beijing, anticipates first-half 2026 revenue to rise by as much as 149% year-over-year.
The Chinese government has directed technology firms to seek homegrown substitutes for products from U.S. chipmaker Nvidia Corp. Despite the recent U.S. approval of sales of the powerful H200 artificial intelligence processor, actual shipments into China have been very low. U.S. officials noted last month that the number of these chips sent to the country remains negligible. In reaction, Chinese businesses are stepping up their procurement of AI chips produced domestically. The share of locally made AI accelerators in company budgets is projected to climb from 30% at present to 46% within the next twelve months, based on a June survey by Bloomberg Intelligence of industry leaders.
China is investing 2 trillion yuan, or about $295 billion, over the next five years into building new data centers, with a clear preference for domestic suppliers. Key players like Huawei Technologies Co. and Alibaba Group's chip arm, T-Head, will account for at least 80% of the AI chip needs for this initiative. Experts at Morgan Stanley predict China will achieve a self-sufficiency level of 70% in AI chips by the end of this decade, compared to 42% in 2025.
Huawei is ramping up manufacturing of its top-tier AI chips, planning to produce approximately 600,000 units of the 910C Ascend series in 2026. Additionally, Cambricon and Hygon Information Technology Co. are currently being evaluated by many companies for their AI accelerators, signaling growing confidence in domestic capabilities.
The shift is also being shaped by the ongoing restrictions the U.S. has imposed on China's access to advanced semiconductor technology. While recent decisions have allowed some high-performance chips to enter the country, the limited availability has driven increased demand for locally produced alternatives. This combination of policy push and restricted access to foreign tech is creating a fertile environment for Chinese chipmakers to expand their market presence.
In the years ahead, the data center expansion project is expected to be a key driver of demand for AI chips manufactured in China. Local suppliers will play a central role in fulfilling the project's requirements, which will include a wide range of components, including AI accelerators. This shift is not only expected to boost the domestic semiconductor industry but also to enhance China's broader technological independence.
With companies like Moore Threads, Cambricon, and Shanghai Iluvatar CoreX making strong gains in revenue, the momentum for domestic chip production appears to be gaining steam. These advancements are aligned with a government directive to reduce reliance on imported technology and increase the use of homegrown components. The long-term impact of these strategies could reshape the global AI chip market, with China emerging as a stronger competitor in the sector.