Nvidia NASDAQ:NVDA and Advanced Micro Devices NASDAQ:AMD could face increasing competition in China as businesses plan to allocate a larger share of their artificial intelligence chip spending to domestic suppliers over the next year.
The survey of 60 executives across software, finance, manufacturing, and retail industries found respondents expect to direct 46% of AI chip budgets to Chinese vendors over the next 12 months, up from about 30% currently. Many participants also indicated AI infrastructure projects are exceeding planned budgets.
Chinese chipmakers, including Huawei, Hygon, and Cambricon, are expected to benefit from the spending shift. The survey also said major technology companies such as Tencent (TCEHY) and Alibaba NYSE:BABA continue expanding AI infrastructure, while startup Z.ai is evaluating the development of its own AI processors to support growing demand.
Nvidia and AMD chips remain in use across China, but their market share may come under pressure as domestic alternatives gain traction and access to foreign AI processors becomes more constrained.