China seems to have made up its mind. It had enough of US export controls. In a new guidance issued, the Chinese government requires all state-funded data centre projects to exclusively use domestically manufactured artificial intelligence chips. According to a report in Reuters, quoting sources, Chinese regulators in recent weeks instructed data centres that are less than 30% complete to remove any installed foreign-made chips or cancel pending orders. Projects already in advanced stages of construction will be reviewed individually, they said.
The directive marks one of Beijing’s strongest steps yet to eliminate foreign technology from critical infrastructure as it accelerates its push for AI chip self-sufficiency. The move comes even as trade tensions between Washington and Beijing have cooled slightly.
Access to advanced AI chips — including those made by U.S. chipmaker Nvidia — has been a key flashpoint between the two nations as they compete for dominance in high-performance computing. US President Donald Trump said in an interview broadcast, following talks with Chinese President Xi Jinping last week, that Washington would “let them deal with Nvidia but not in terms of the most advanced” chips.
What makes Nvidia the biggest causality
Other than Nvidia, other foreign chipmakers that sell data centre chips to China include AMD and Intel. China action on data centres is bad news for all these American companies. However, analysts say that the new Chinese guidance could effectively shut Nvidia out of one of its most important markets, while creating fresh opportunities for domestic rivals such as Huawei Technologies.
It remains unclear whether the guidance applies nationwide or only to certain provinces. AI data centre projects in China have attracted more than $100 billion in state funding since 2021, according to a Reuters review of government tenders. Most of those projects have received some level of public financing, meaning the directive could have sweeping implications. Nvidia Chief Executive Jensen Huang has repeatedly urged Washington to relax export restrictions, arguing that allowing China limited access to U.S.-made chips helps preserve America’s influence in the global AI race.
The new rules cover Nvidia’s H20 chips — the most advanced models currently permitted for sale to China — as well as higher-performance processors such as the B200 and H200, which are barred under U.S. export rules but reportedly remain available via grey-market channels.
US export controls on Chinese companies
Beijing has long bristled at U.S. export controls aimed at curbing its technological advancement and has launched multiple initiatives to reduce reliance on American hardware. The U.S. government maintains that its restrictions are necessary to prevent the Chinese military from using advanced chips to bolster its capabilities.
In recent months, China has discouraged local firms from buying Nvidia’s top-end chips over national security concerns. The country has also showcased data centres powered entirely by homegrown AI chips. In 2023, Beijing banned the use of Micron’s products in critical infrastructure, a move that later prompted the U.S. memory chipmaker to exit the Chinese server chip market, Reuters reported previously.
The directive marks one of Beijing’s strongest steps yet to eliminate foreign technology from critical infrastructure as it accelerates its push for AI chip self-sufficiency. The move comes even as trade tensions between Washington and Beijing have cooled slightly.
Access to advanced AI chips — including those made by U.S. chipmaker Nvidia — has been a key flashpoint between the two nations as they compete for dominance in high-performance computing. US President Donald Trump said in an interview broadcast, following talks with Chinese President Xi Jinping last week, that Washington would “let them deal with Nvidia but not in terms of the most advanced” chips.
What makes Nvidia the biggest causality
Other than Nvidia, other foreign chipmakers that sell data centre chips to China include AMD and Intel. China action on data centres is bad news for all these American companies. However, analysts say that the new Chinese guidance could effectively shut Nvidia out of one of its most important markets, while creating fresh opportunities for domestic rivals such as Huawei Technologies.
It remains unclear whether the guidance applies nationwide or only to certain provinces. AI data centre projects in China have attracted more than $100 billion in state funding since 2021, according to a Reuters review of government tenders. Most of those projects have received some level of public financing, meaning the directive could have sweeping implications. Nvidia Chief Executive Jensen Huang has repeatedly urged Washington to relax export restrictions, arguing that allowing China limited access to U.S.-made chips helps preserve America’s influence in the global AI race.
The new rules cover Nvidia’s H20 chips — the most advanced models currently permitted for sale to China — as well as higher-performance processors such as the B200 and H200, which are barred under U.S. export rules but reportedly remain available via grey-market channels.
US export controls on Chinese companies
Beijing has long bristled at U.S. export controls aimed at curbing its technological advancement and has launched multiple initiatives to reduce reliance on American hardware. The U.S. government maintains that its restrictions are necessary to prevent the Chinese military from using advanced chips to bolster its capabilities.
In recent months, China has discouraged local firms from buying Nvidia’s top-end chips over national security concerns. The country has also showcased data centres powered entirely by homegrown AI chips. In 2023, Beijing banned the use of Micron’s products in critical infrastructure, a move that later prompted the U.S. memory chipmaker to exit the Chinese server chip market, Reuters reported previously.
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