The chipmaker is cutting ties with distributors across Southeast Asia as US export controls tighten and its China market share craters from 66% to an estimated 8%.
Nvidia is slashing its list of approved customers across Asia, tightening the vetting process for distributors in a region that has increasingly become a backdoor for restricted chip exports to China. The move comes as US export controls continue to squeeze Nvidia’s once-dominant position in the world’s second-largest economy, where its AI GPU market share is projected to collapse from 66% in 2024 to roughly 8% by 2026.
The smuggling problem Nvidia can’t ignore #
Nvidia has launched investigations into several Southeast Asian distributors suspected of funneling restricted hardware into China. The most notable case involves Singapore-based Megaspeed, which is accused of facilitating the transfer of banned Nvidia equipment between June 2024 and June 2025. Megaspeed is linked to over $2 billion in potential orders.
The company has been developing compliant chip variants, like the H20, specifically designed to meet export control thresholds while still offering something to Chinese buyers. In May 2026, the US approved roughly 10 Chinese companies for purchases of the more advanced H200 chip. The catch: zero shipments have actually been made, with regulatory hurdles on the Chinese side blocking delivery.
China’s self-reliance push is working #
Beijing has mandated that state-funded data centers exclusively use domestic chips, effectively locking Nvidia out of a massive segment of demand. Chinese firms like Huawei have ramped up production of homegrown alternatives, and local producers are projected to capture an estimated 80% of China’s AI chip market. China’s antitrust actions against Nvidia add another layer of pressure.
What this means for investors #
Watch the H200 shipment situation closely. If those approved sales to companies like Alibaba and Tencent remain at zero deliveries, it would confirm that the regulatory barriers between US chipmakers and Chinese buyers are becoming structural rather than temporary.
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