China has reportedly issued guidance that needs state-funded data centres to use only domestically manufactured artificial intelligence (AI) chips.
As reported by Reuters, data centres less than 30% complete must remove foreign chips or cancel purchases, while the cutting-edge projects will be assessed case by case.
This significant move aims to minimise dependence on foreign technology and progress China’s AI chip self-sufficiency.
Access to cutting-edge chips, including Nvidia’s, has been a significant U.S.-China friction point. While US President Trump stated the US would allow some Nvidia sales, Beijing’s guidance could impede the company from regaining market stocks that may positively work for other competitors, including Huawei.
Notably, AMD and Intel are also the suppliers of data centre chips in China.
Moreover, China has invested more than $100 billion in AI data centres since 2021, most receiving some state funding.
A few projects, including a northwestern facility are reportedly planning to launch Nvidia chips, have been suspended.
Previously, the government had limited international technology due to security concerns, and displayed data centres running solely on domestic chips.
The directive covers Nvidia’s H20 chips and more powerful B200 and H200 processors, though the latter are available in China via grey markets. Domestic AI chipmakers, from Huawei to startups like Cambricon and Moore Threads, may gain market share. However, reliance on local chips risks widening the U.S.-China gap in AI computing, especially as firms like SMIC face production constraints due to U.S. sanctions.
The directive covers Nvidia’s H20 chips and more robust B200 and H200 processors, though the latter are available in China via grey markets.
Meanwhile, domestic AI chip manufacturers, including Cambricon, Huawei, and other companies' shares are expected to surge in the near future.
However, reliance on domestic chips risks broadening the U.S.-China gap in AI computing, particularly as companies that include SMIC are expected to experience production limitations due to U.S. sanctions.
