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The flags of China and the USA are being displayed on a smartphone, with an NVIDIA chip visible in the background. 

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Chinese companies are ramping up efforts to produce a viable alternative to Nvidia’s chips that power artificial intelligence as Beijing continues its efforts to wean itself off American technology.

U.S. sanctions slapped on China over the past few years, along with Nvidia‘s dominance in the space, have provided big challenges for Bejing’s efforts, at least in the short term, analysts told CNBC.

Nvidia’s well-documented boom has been driven by large cloud computing players buying its server products which contain its graphics processing units, or GPUs. These chips are enabling companies, such as ChatGPT maker OpenAI, to train their huge AI models on massive amounts of data.

These AI models are fundamental to applications like chatbots and other emerging AI applications.

The U.S. government has restricted the export of Nvidia’s most advanced chips to China since 2022, with restrictions tightening last year.

Such semiconductors are key to China’s ambitions to become a leading AI player.

CNBC spoke to analysts who identified some of China’s leading contenders that are looking to challenge Nvidia, including technology giants Huawei, Alibaba and Baidu and startups such as Biren Technology and Enflame.

The overarching view is that they are lagging behind Nvidia at this point.

“These companies have made notable progress in developing AI chips tailored to specific applications (ASICs),” Wei Sun, a senior analyst at Counterpoint Research, told CNBC.

“However, competing with Nvidia still presents substantial challenges in technological gaps, especially in general-purpose GPU. Matching Nvidia in short-term is unlikely.”

China’s key challenges

Chinese firms have a “lack of technology expertise”, according to Sun, highlighting one of the challenges.

However, it’s the U.S. sanctions and their knock-on effects that pose the biggest roadblocks to China’s ambitions.

Some of China’s leading Nvidia challengers have been placed on the U.S. Entity List, a blacklist which restricts their access to American technology. Meanwhile, a number of U.S. curbs have restricted key AI-related semiconductors and machinery from being exported to China.

China’s GPU players all design chips and rely on a manufacturing company to produce their chips. For a while, this would have been Taiwan Semiconductor Manufacturing Co., or TSMC. But U.S. restrictions mean many of these firms cannot access the chips made by TSMC.

They therefore have to turn to SMIC, China’s biggest chipmaker, whose technology remains generations behind TSMC. Part of the reason why it’s lagging behind, is because Washington has restricted SMIC’s access to a key piece of machinery from Dutch firm ASML, which is required to manufacture the most advance chips.

Meanwhile, Huawei has been pushing development of more advanced chips for its smartphones and AI chips, which is taking up capacity at SMIC, according to Paul Triolo, a partner at consulting firm Albright Stonebridge.

“The key bottleneck will be domestic foundry leader SMIC, which will have a complex problem of dividing limited resources for its advanced node production between Huawei, which is taking up the lion’s share currently, the GPU startups, and many other Chinese design firms which have been or may be cutoff from using global foundry leader TSMC to manufacture their advanced designs,” Triolo told CNBC.

Nvidia is more than just GPUs

Nvidia has found success due to its advanced semiconductors, but also with its CUDA software platform that allows developers to create applications to run on the U.S. chipmaker’s hardware. This has led to the development of a so-called ecosystem around Nvidia’s products that others might find hard to replicate.

“This is the key, it is not just about the hardware, but about the overall ecosystem, tools for developers, and the ability to continue to evolve this ecosystem going forward as the technology advances,” Triolo said.

Huawei leading the pack

Triolo identified Huawei as one of the leaders in China with its Ascend series of data center processors.

The firm’s current generation of chip is called the Ascend 910B, and the company is gearing up to launch the Ascend 910C, which could be on par with Nvidia’s H100 product, according to a Wall Street Journal report in August.

In its annual report earlier this year, Nvidia explicitly identified Huawei, among other companies, as a competitor in areas such as chips, software for AI and networking products.

U.S. export controls on Chinese firms could 'get even worse' if Trump is re-elected: Analyst

In the area of software and building a developer community, Huawei “holds lots of advantages,” Triolo said. But it faces similar challenges to the rest of the industry in trying to compete with Nvidia.

“The GPU software support ecosystem is much more entrenched around Nvidia and to a lesser degree AMD, and Huawei faces major challenges, both in producing sufficient quantities of advanced GPUs such as part of the Ascend 910C, and continuing to innovate and improve the performance of the hardware, given U.S. export controls that are limiting the ability of SMIC to produce advanced semiconductors,” Triolo said.

Chip IPOs ahead?

The challenges facing China’s Nvidia competitors have been evident over the past two years. In 2022, Biren Technology carried out a round of layoffs, followed by Moore Threads the year after, with both companies blaming U.S. sanctions.

But startups are still holding out hope, looking to raise money to fund their goals. Bloomberg reported last week that Enflame and Biren are both looking to go public to raise money.

“Biren and the other GPU startups are staffed with experienced industry personnel from Nvidia, AMD, and other leading western semiconductor companies, but they have the additional challenge of lacking the financial depth that Huawei has,” Triolo said.

“Hence both Biren and Enflame are seeking IPOs in Hong Kong, to raise funding for additional hiring and expansion.”

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S&P 500 win streak, Berkshire’s leadership changes, Netflix’s regulatory path and more in Morning Squawk

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December 8, 2025

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S&P 500 win streak, Berkshire's leadership changes, Netflix's regulatory path and more in Morning Squawk

A Wall Street sign is viewed in front of the New York Stock Exchange.

Eduardo Munoz | AFP | Getty Images

This is CNBC’s Morning Squawk newsletter. Subscribe here to receive future editions in your inbox.

Here are five key things investors need to know to start the trading day:

1. Secret Santa

The three major indexes are coming off back-to-back winning weeks, with the S&P 500 on Friday rising closer to records it set earlier this year. Stocks’ advances came as investors geared up for the last Federal Reserve policy meeting of the year, which is set to kick off tomorrow.

Here’s what to know:

  • The delayed release of September’s personal consumption expenditures price index showed core PCE — a key inflation measure — was lighter than economists anticipated on a 12-month basis.
  • The report gave stocks a boost on Friday, as traders bet the data would encourage Fed officials to cut interest rates this week.
  • The Fed is set to announce its decision on Wednesday. Traders are pricing in about a 90% likelihood that the central bank cuts interest rates again, according to CME’s FedWatch tool.
  • Meanwhile, Treasury Secretary Scott Bessent said Sunday that he expects the U.S. economy to finish the year with 3% real GDP growth, even after the hit from the federal government shutdown.
  • Following its four-day win streak last week, the S&P 500 is now roughly 0.7% away from its intraday record and about a quarter-percent off its closing high.
  • Follow live markets updates here.

2. Changing of the guard

Todd Combs, portfolio manager at Berkshire Hathaway Inc., waits for the start of the “Berkshire Hathaway Invest In Yourself 5K” race presented by Brooks Sports, a Berkshire Hathaway Inc. company, on the sidelines of the Berkshire Hathaway shareholders meeting in Omaha, Nebraska, U.S., on Sunday, May 4, 2014.

Daniel Acker / Bloomberg / Getty Images

Berkshire Hathaway announced this morning that Todd Combs, investment officer and Geico CEO, will leave the conglomerate to join JPMorgan Chase as head of its new Security and Resiliency Initiative.

Berkshire CEO Warren Buffett, who will step down as CEO at the end of the year, said in a press release that Combs “made many great hires” for Geico and “broadened its horizons.”

Nancy Pierce, operations chief at Geico, will replace Combs as the business’ CEO. Berkshire also announced that its CFO Marc Hamburg will retire in June 2027 and be replaced by Charles Chang, current CFO of Berkshire Hathaway Energy.

3. L.A. confidential

Dado Ruvic | Reuters

Both Wall Street and Hollywood were left reeling after the announcement of the Netflix–Warner Bros. deal on Friday. Now, the question is if the agreement can get over regulatory hurdles.

President Donald Trump’s administration views the deal with “heavy skepticism,” a senior administration official told CNBC’s Eamon Javers on Friday. Sen. Elizabeth Warren, D-Mass., has already asked for an antitrust review, calling the deal an “anti-monopoly nightmare.”

Believing it has a better chance of securing regulatory approval, Paramount Skydance is weighing whether to bring a bid straight to WBD shareholders in a last-ditch effort to beat Netflix, sources told CNBC’s Alex Sherman. Meanwhile, movie theater operators are wondering whether they can survive if the Netflix deal makes the world’s largest streaming service the owner of a major film studio.

4. Google’s answer

Silas Stein | Picture Alliance | Getty Images

After losing its search antitrust case last year, Alphabet on Friday got more details about the consequences it will face.

U.S. District Judge Amit Mehta said Google can’t enter into an agreement like it has with Apple, which it pays for search browser usage, unless the deal has termination date of a year or less. Mehta also listed requirements for the makeup of a committee that will decide who Google has to share its data with.

But as CNBC’s Jennifer Elias notes, these weren’t the most drastic punishments on the table. Mehta in September ruled against harsher penalties proposed by the Department of Justice, which could have included the forced sale of Google’s Chrome browser.

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5. Unfading endurance

How often should jeans really be washed?

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The global denim market is now a more than $100 billion industry, driven by major retailers such as Levi Strauss and American Eagle. But as CNBC’s Gabrielle Fonrouge reports, its origins are far more humble.

Blue jeans were born out of a woman’s frustration with the frequent rips in her gold miner husband’s denim pants. Her tailor’s solution — adding copper rivets to the garment’s key points of strain — signified the birth of what we know today as the blue jean. In the approximately century and a half since, the pant has become a staple of American fashion that transcends income class and trend cycles.

The Daily Dividend

Here’s what we’re keeping an eye on this week:

CNBC Pro subscribers can see a calendar and rundown for the week here.

— CNBC’s Sean Conlon, Ryan Ermey, Alex Sherman, Lillian Rizzo, Dan Mangan, Sarah Whitten, John Melloy, Jennifer Elias and Gabrielle Fonrouge contributed to this report. Josephine Rozzelle edited this edition.

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Confluent stock soars 29% as IBM announces $11 billion acquisition deal

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December 8, 2025

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Confluent stock soars 29% as IBM announces billion acquisition deal

IBM CEO Arvind Krishna speaks at the SXSW conference in Austin, Texas, on March 11, 2025.

Andy Wenstrand | Sxsw Conference & Festivals | Getty Images

IBM announced Monday that it is acquiring data streaming platform Confluent in a deal worth $11 billion.

Shares of Confluent soared 29%. IBM stock climbed about 1%.

IBM will pay $31 per share in cash for all of the issued and outstanding common shares of Confluent, according to a release. The transaction is expected to close by the middle of 2026. Shares of Confluent closed at $23.14 on Friday.

Tune in at 10:10 a.m. ET as IBM CEO Arvind Krishna joins CNBC TV to discuss the deal. Watch in real time on CNBC+ or the CNBC Pro stream.

“With the acquisition of Confluent, IBM will provide the smart data platform for enterprise IT, purpose-built for AI,” IBM CEO Arvind Krishna said in a release.

IBM said the deal will bolster its artificial intelligence offerings as it expects global data growth to more than double by 2028.

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Wedbush called it a “strong move” from IBM that adds more data processing capabilities to its hybrid cloud ecosystem and is a natural fit to help eliminate data silos for powering AI.

“We loudly applaud this deal as Arvind takes IBM further into the AI Revolution with more acquisitions likely ahead,” the analysts said in a note.

Wedbush maintained its overweight rating on IBM and $325 price target. IBM closed at $307.94 on Friday.

The addition of Confluent fits with IBM’s deal last year to land cloud software maker HashiCorp for $6.4 billion and the 2023 move to acquire Apptio in a deal worth $4.6 billion. Both of those acquisitions were all-cash deals.

Confluent has more than 6,500 clients across major industries and works with Anthropic, Amazon‘s AWS, Google Cloud Platform, Microsoft, Snowflake and others.

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BlackRock bets on ‘pick and shovel’ trade, singling out clear winners in AI spending spree

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December 8, 2025

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BlackRock bets on ‘pick and shovel’ trade, singling out clear winners in AI spending spree

Ben Powell, chief strategist for Middle East and Asia Pacific at BlackRock Investment Institute, during a Bloomberg Television interview at the Abu Dhabi Finance Week (ADFW) conference in Abu Dhabi, AD, United Arab Emirates, on Monday, Dec. 9, 2024.

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The wave of capital pouring into artificial intelligence infrastructure is far from peaking, said Ben Powell, chief investment strategist for APAC at BlackRock, arguing the sector’s “picks and shovels” suppliers — from chipmakers to energy producers and copper-wire manufacturers — remain the clearest winners as hyperscalers race to outspend one another.

The surge in AI-related capital expenditure shows no sign of slowing as tech giants push aggressively to secure an edge in what they see as a winner-takes-all contest, Powell told CNBC Monday on the sidelines of the Abu Dhabi Finance Week.

“The capex deluge continues. The money is very, very clear,” he said, adding that BlackRock is focused on what he called a “traditional picks and shovels capex super boom, which still feels like it’s got more to go.”

AI infrastructure has been one of the biggest drivers of global investment this year, fueling a broader market rally, even as some investors question how long the boom can last.

Nvidia, whose GPU chips are the backbone of the AI revolution, became the first company to briefly surpass $5 trillion in market capitalization amid a dizzying AI-fueled market rally that sparked talk of an AI bubble.

Microsoft and OpenAI also reached a restructuring deal in October to support the ChatGPT developer’s fundraising efforts. OpenAI has reportedly been preparing for an initial public offering that could value the company at $1 trillion, according to Reuters.

The build-out has set off long-term procurement efforts across the tech sector, from chip supply agreements to power commitments. Grid operators from the U.S. to the Middle East are racing to meet soaring electricity demand from new data centers. Companies, including Amazon and Meta, have budgeted tens of billions of dollars annually for AI-related investments.

S&P Global estimates data-center power demand could nearly double by 2030, mostly driven by hyperscale, enterprise and leased facilities, along with crypto-mining sites.

‘Dipping toes into credit market’

Powell also noted that leading tech firms have only begun to tap capital markets to fund the next phase of AI expansion, suggesting additional capital is on the way.

“The big companies have only just started dipping their toes into the credit markets… feels like there’s a lot more they can do there,” he said.

The “hyperscalers” are behaving as if coming second would effectively leave them out of the market, Powell said. That mindset, he added, has pushed firms to accelerate spending even at the risk of overshooting.

Much of that capital, Powell noted, is likely to flow to the companies powering the AI build-out rather than model developers, reinforcing a growing view among global investors that the most durable gains from the AI boom may lie in the hardware, energy and infrastructure ecosystems behind the technology.

“If we’re the recipients of that cash flow, I guess that’s a pretty good place to be, whether you’re making chips, whether you’re making energy all the way down to the copper wiring,” Powell noted, expecting “positive surprises driving those stocks in the year ahead.”

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