Nvidia's China chip sales stall as Huawei surges; rival Etched hits $5B valuation

Nvidia is losing its AI chip edge in China as US export controls boost local chipmakers. AP reports that Huawei and fast-growing DeepSeek have taken the lead in the Chinese market, eroding Nvidia's dominance there even as global revenue continues expanding toward roughly $91 billion for the May-July quarter. The China stall is a structural shift: export restrictions intended to slow Chinese AI have instead accelerated a domestic supply chain.

Simultaneously, competition is heating up on inference. Startup Etched revealed it has booked $1 billion in contract orders for its "frontier inference clusters" — full systems bundling its custom chips with racks and software to run frontier models faster, cheaper, and more power-efficiently than rivals. Etched closed an unannounced $500 million round in December at a $5 billion post-money valuation, bringing total funding to $800 million. Its cap table includes Jane Street, Two Sigma, Peter Thiel, and AI heavyweights Andrej Karpathy, Geoffrey Hinton, and Fei-Fei Li.

Inference is the biggest cost center for AI companies serving customers at scale, which is exactly why investors are backing anyone promising to solve it — from Etched to DeepSeek's DSpark framework. Nvidia isn't standing still: it announced Claude models running on GB300 Blackwell Ultra in Azure and, with Cambridge, published a "Red Queen Gödel Machine" AI self-evolution paper that reignited debate over a 2028 ASI timeline.

The takeaway: Nvidia's training moat remains formidable, but the inference layer and the China market are where its dominance is being actively contested. The Red Queen paper drew heated reactions, with Anthropic's Jack Clark among those weighing in on the aggressive timeline.