In the headline video, the reporter asks: "How far behind is China in AI compared to the U.S.?"
Nvidia CEO Jensen Huang responds: "China is not behind."
He adds: "Keep in mind, 50% of the world’s top AI researchers are Chinese. This is a long race."
The central technology contest today is between Huawei and the Western platforms that control smartphones, operating systems, and artificial intelligence chips. A Chinese company once dependent on Google services and American semiconductors has built an operating system with hundreds of millions of users, a premium handset line that has returned to the top of its domestic market, and an expanding supply of AI accelerators that threaten Nvidia’s hold on global computing. What began as an emergency response to U.S. sanctions has grown into a direct challenge to Apple, Google, Microsoft and Nvidia across multiple markets.
The path to this contest was laid by sanctions. In May 2019, the United States placed Huawei on the Commerce Department’s Entity List, cutting access to Google Mobile Services and blocking key U.S. technologies. Reuters reported at the time that Huawei’s new phones could no longer ship with the Google apps package that defined Android outside China. That single measure dismantled Huawei’s global smartphone business almost overnight. Washington justified the ban as a national security precaution, pointing to risks in Huawei’s telecoms equipment, but the sharpest impact fell on consumer devices.
In 2020, Washington tightened controls further through the Foreign Direct Product Rule. The Bureau of Industry and Security extended restrictions to semiconductors produced using American software and tools, even when manufactured abroad. This blocked Huawei’s access to chips from Taiwan Semiconductor Manufacturing Company, which had supplied the most advanced processors. Huawei had stockpiled inventory, but the rule effectively froze its access to the global leading edge. Every new product cycle became an exercise in improvisation under sanctions.
Industry analysts warned that the measures could backfire. Paul Triolo, technology analyst at Eurasia Group, told the Financial Times in 2020 that Washington’s controls might accelerate China’s semiconductor independence drive. The Center for Strategic and International Studies noted that Beijing would likely respond with long-term state support for domestic supply chains. Both forecasts proved accurate. Huawei was forced into retrenchment but backed by industrial policy to rebuild on Chinese terms.
The most visible response was HarmonyOS. Launched in 2019, initially for internet-of-things devices, it evolved into a full smartphone operating system. By June 2024 Huawei announced that 900 million devices were running HarmonyOS, and Reuters carried the figure internationally. These devices included phones, televisions, wearables, and household appliances. The number demonstrated scale large enough to attract developers. In February 2024, Huawei announced HarmonyOS NEXT, which would drop support for Android applications. Reuters reported that this forced developers to migrate to native frameworks, a move possible only with a large domestic base.
The Chinese smartphone market confirmed that the strategy worked. Counterpoint Research reported in 2024 that HarmonyOS surpassed iOS to become the second most used mobile operating system in China. Canalys confirmed that Huawei ranked first in Chinese smartphone shipments by the second quarter of 2025, overtaking Apple and domestic rivals. In 2020 Huawei’s global shipments had collapsed, yet by 2025 it regained premium position in the world’s largest smartphone market. Apple’s sales in China fell sharply in late 2024 and early 2025 despite rare price cuts. Canalys reported that Apple’s flagship models were squeezed by Huawei’s Mate and P-series, supported by patriotic demand and strong domestic distribution.
Semiconductors were the other front. In 2023, Huawei released the Mate 60 Pro, which contained a 7-nanometre-class processor manufactured by Semiconductor Manufacturing International Corporation (SMIC). TechInsights, a Canadian analysis firm, confirmed the node in a published teardown. The finding surprised industry observers, as U.S. restrictions were designed to prevent such advances. Reuters reported the result and noted Washington’s immediate response was new export rules in October 2023 that restricted Nvidia’s most advanced GPUs, including downgraded versions previously permitted. The move was intended to close gaps but cut Nvidia’s China sales and intensified substitution pressures.
By April 2025, Reuters reported Huawei would begin mass shipments of its Ascend 910C AI accelerator, combining two 910B dies. In August 2025, the Financial Times reported China was on track to triple domestic AI chip output during the year, with Huawei among the lead suppliers. The story by then had ceased to be about handsets but about China’s capacity to supply core compute.
Independent analysts emphasised limits. The Mercator Institute for China Studies wrote in 2025 that Nvidia still dominated the Chinese AI accelerator market, with Huawei’s volumes much smaller. CUDA, Nvidia’s software stack, locked in developers and constrained substitution. Western firms had little incentive to port code to Huawei’s CANN platform. Yet Huawei’s growing share of inference and government workloads showed that substitution was already advancing where strategically necessary.
Huawei also extended HarmonyOS into cars and appliances. Reuters reported HarmonyOS-powered cockpit systems in Aito-branded vehicles. Developer conferences promoted OpenHarmony as a national embedded software base. The approach tied together phones, vehicles, and cloud. Huawei positioned itself both as a device maker and a provider of a domestic operating ecosystem spanning multiple product categories.
At this point the rivalry is open to anyone with two eyes to see for themselves. Huawei now leads China’s premium smartphone segment, runs an operating system with nearly a billion devices, and supplies AI accelerators to domestic data centres. Western incumbents remain entrenched globally, but Huawei is secure within its domestic sphere. The pattern reflects durable bifurcation rather than temporary disruption. The test of an ecosystem includes device shipments and the economic web it sustains. Apple’s iOS and Google’s Android anchor multi-billion-dollar advertising and payments businesses. Microsoft’s Windows remains dominant not for technical reasons but because enterprise systems and user habits reinforce it. Huawei aims to match this model in China. HarmonyOS NEXT’s abandonment of Android compatibility in 2024 was a declaration of independence. Huawei expects developers to treat HarmonyOS as first-class.
Payment integration followed and AppGallery replaced Google Play in China whilst domestic financial systems are linked with Huawei billing services. Canalys noted that AppGallery revenues rose steadily, as Chinese developers shifted focus. Google Play, which generated $40 billion in spending globally in 2023, was absent in China, giving Huawei uncontested space. Advertising economics further illustrate the divergence. Google’s $200 billion ad revenue depends on Android distribution. In China those slots are filled by Baidu, Tencent, and Bytedance. Huawei provides the device layer for these platforms, cementing the separation. Analysts at Bernstein Research wrote in 2025 that Huawei’s integration into the domestic ad ecosystem gave Beijing confidence in HarmonyOS as a national platform.
Apple’s experience in 2024–25 underscored the shift. Reuters reported rare discounts and subsidies by Apple in China, an unusual tactic for the company and yet Canalys confirmed shipments still fell. Huawei’s premium devices captured share, supported by HarmonyOS services and patriotic preference. Apple’s branding power no longer outweighed structural advantages Huawei held inside China.
Outside China, Huawei struggles to replicate the model. Developers in Europe, North America, and allied markets focus on Android and iOS, where consumer spending remains higher. Reuters noted that Huawei’s decision to drop Android support in HarmonyOS NEXT increased barriers abroad. Without Google services, international adoption remains low. Enterprise environments tell the same story. Microsoft Windows continues to dominate in Western offices. Azure, Office 365, and Teams are integrated into global enterprises. HarmonyOS remains an embedded system, not a corporate desktop. The Western enterprise software stack is too entrenched to shift. In the automotive sector, the same duality appears. HarmonyOS powers Aito vehicles inside China, but Android Auto and Apple CarPlay dominate outside. The global car industry is therefore also split by market.
The semiconductor battle highlights the strategic depth. Nvidia’s near monopoly in data-centre GPUs rests on CUDA and hardware performance. In 2023, U.S. restrictions blocked A100 and H100 exports to China. Reuters reported that the October 2023 rules extended even to downgraded H800 versions. Nvidia lost billions in potential sales. Huawei and SMIC stepped into the gap, though with yield and node limitations.
Huawei’s Ascend 910 series gained ground in inference. Government directives ensured procurement for domestic projects. State-owned enterprises were ordered to prefer domestic accelerators. While Nvidia retained frontier training workloads, Huawei built a parallel base for inference. The Financial Times reported that China aimed to triple AI chip output in 2025 and Huawei was central to that effort. Capacity constraints remain as SMIC’s 7nm process is functional but low-yield compared to TSMC. Without access to extreme ultraviolet lithography, progress to 5nm and below is difficult. Bernstein analysts noted that SMIC’s volumes remain limited. Huawei therefore cannot match Nvidia’s global scale but can serve domestic needs.
The financial stakes are vast, just look at Nvidia’s data-centre revenue that topped $47.5 billion in 2024. China accounted for a quarter of that. A complete loss of that share would remove $10 billion and If Huawei captured half the global market on top of China substitution, Nvidia’s sales could fall by $55 billion annually. Analysts estimate that could erase $1 trillion in valuation.
Alphabet depends on Android for advertising reach. $200 billion in ad revenue flows through Android distribution. A loss of half the world’s Android base would remove $50–70 billion. Google Play, with $40 billion in consumer spending, would lose $20 billion. Microsoft faces a similar stress case because if half the world abandoned Windows, revenues could fall by $70 billion annually, undermining Microsoft 365 and Azure. Apple would lose $30 billion if half its China sales disappeared, given that China is a fifth of its revenue.
These scenarios represent extreme outcomes, but they cannot be ignored.
Western markets continue to show strong loyalty to established incumbents. Huawei lacks the capacity to supply technology to half the world. However, the modelling highlights just how large the risk truly is. Investors need to adjust valuations that assume seamless global market access. The future likely holds two separate markets, rather than a unified one.
Regional analysis supports this. Huawei consolidates dominance in China. By 2030, HarmonyOS will be fully native, Ascend chips widespread, and Western platforms relegated to niches. In the West, Apple, Google, Microsoft, and Nvidia remain secure. In Southeast Asia, Huawei may win 15–20 per cent share where governments are open, but Western apps remain indispensable. In the Middle East and Africa, Huawei expands aggressively through financing, infrastructure ties, and competitive pricing. The result is two blocs. In China and aligned regions, Huawei supplies the stack from devices to AI chips. In the West, incumbents remain entrenched. Between them lie contested grey zones.
The policy lesson is that sanctions created permanence. The U.S. Commerce Department said in 2020 its controls targeted chips that were the “direct product” of American tools. That decision forced Huawei to develop chips and systems in parallel. Reuters quoted Huawei in 2024 stating 900 million devices ran HarmonyOS. The Financial Times reported China would triple AI chip output. MERICS in 2025 wrote that Nvidia “continues to dominate” in China. Each source confirms that the split is structural. The evidence shows dismantling of monopoly power as Nvidia’s dominance has been checked inside China. Google no longer controls distribution in the world’s largest smartphone market. Microsoft faces substitution in Chinese state enterprises. Apple has lost premium leadership in China. What began as Western monopoly has become duality.
The global technology industry now rests on two pillars. Investors, regulators, and policymakers must accept this order as permanent. Huawei has secured its place as cornerstone of a rival system. The Western platforms remain entrenched, but the global monopoly is dismantled. The world will live with two blocs, not one.
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