China Bans Foreign AI Chips from State-Funded Data Centers, Offers Power Subsidies for Domestic Alternatives

China bans foreign AI chips from state-funded data centers, report claims -- crackdown would include removing Nvidia, AMD, and Intel chips from builds in early stages

Projects using government funds must now deploy only domestic accelerators. China has reportedly issued a sweeping ban on foreign AI chips in any data center backed by government money, according to a report by Reuters. The move applies retroactively to builds still in early stages, meaning accelerators from Nvidia, AMD, and Intel may need to be removed or replaced if already installed. The report, citing unnamed sources with direct knowledge, claims regulators have instructed state-funded projects to use only Chinese-made silicon going forward. That includes domestic chips from Huawei, Cambricon, and Enflame, among others. While the official directive has not been published, the guidance would mark a formal shift from earlier policies that merely discouraged foreign chip purchases. Under the new dictat, even parts like Nvidia's H20 -- a model specifically designed to comply with U.S. export controls -- will now be off the table. This follows Chinese port crackdowns on all Nvidia imports in early October. Projects that are less than 30% complete are allegedly being told to abandon or remove any foreign chips already in use. For Nvidia, which once held more than 90% of China's AI accelerator market, that effectively kills prospects for a comeback via more custom silicon. Last month, Nvidia CEO Jensen Huang said that the company's Chinese market share has effectively plummeted to zero. The guidance appears to target not only the H20, but also Nvidia's higher-end H200 and B200, which are restricted under U.S. export rules but have still made their way into Chinese data centers through unofficial channels. That flow of gray-market parts may now face stricter internal scrutiny, with implications for training clusters already under construction. Over the past two years, China has funneled more than $100 billion into AI infrastructure projects, most of them aligned with provincial or national goals for data sovereignty. That public investment is what gives Beijing's directive real teeth. But while Chinese chipmakers have made strides, they continue to trail Nvidia and AMD in software tooling and performance density. Huawei's Ascend line, often cited as the most mature domestic option, still lacks full parity with CUDA-based stacks. The directive comes amid heightened U.S.-China tech tensions and a broader global reordering of AI supply chains. It remains unclear whether the new policy will eventually extend to privately funded deployments.

China offers tech giants cheap power to boost domestic AI chips

China has increased subsidies that cut energy bills by up to half for some of the country's largest data centres, as Beijing steps up efforts to boost its domestic chips industry and compete with the US. Local governments have beefed up incentives to help Chinese tech giants such as ByteDance, Alibaba and Tencent, which have been hit with higher electricity costs following Beijing's ban on purchasing Nvidia's artificial intelligence chips, according to people familiar with the matter. They added that the new subsidies come after several tech groups complained to regulators about the increased costs of using domestic semiconductors from companies such as Huawei and Cambricon, most of which are less energy-efficient than Nvidia's. Local governments in provinces including Gansu, Guizhou and Inner Mongolia have responded by offering subsidies that slash big data centres' electricity bills by as much as 50 per cent, provided that they are powered by domestic chips. Data centres using chips from foreign vendors such as Nvidia are not qualified for such entitlements, the people said. The move is a further sign of how China is incentivising its tech companies to break their reliance on Nvidia and boost the country's homegrown semiconductor industry so it can compete in an AI race against the US. Electricity required to generate the same amount of tokens -- units of compute power -- from the current generation of Chinese chips is about 30 to 50 per cent higher than Nvidia's H20, according to experts. Huawei, China's leading chipmaker, has sought to overcome the weaker single-chip computing performance of its flagship 910c Ascend chip by combining them into larger clusters, which has added to the operating electricity costs. While tech companies typically lease compute power from third-party data centre operators, they still need to build a significant amount themselves to meet surging demand from AI-driven businesses. Despite the higher energy costs related to using domestic chips, China's more centralised grid network still provides cheaper and greener electricity than the US with no near-term shortage. China's energy-rich remote provinces such as Gansu, Guizhou and Inner Mongolia have become hotspots for data centre clusters. To attract the biggest projects, these local governments have already been competing to offer some energy subsidies as well as cash incentives. Some of these are enough to cover a data centre's operating cost for about a year, said one person with knowledge of the matter. Unit costs of industrial electricity in these provinces are about 30 per cent cheaper than those from the more developed coastal areas in eastern China. With the new subsidies, they will be cut further to about 0.4 yuan, or 5.6 cents, per kWh. This compares to the average industrial electricity cost of about 9.1 cents per kWh in the US, according to August data published by the US Energy Information Administration. Electricity prices vary significantly in different US states due to fragmented grid networks, while US tech groups such as Meta and Elon Musk's xAI are also building their own generators near their data centre clusters in order to lower energy costs. ByteDance, Alibaba and Tencent did not respond to requests for comment. The local governments of Guizhou, Gansu, Inner Mongolia and China's National Development and Reform Commission did not respond to requests for comment.

Chinese provinces offer steep power discounts to AI companies using China-made chips -- country continues its aggressive push towards AI independence and homegrown silicon

The war for AI dominance just got a new front of sorts. According to a new report, some Chinese provinces are now offering steep discounts on industrial power pricing to AI datacenters, with only one catch: they have to use homemade chips rather than Nvidia's or AMD's. According to a Financial Times article citing sources "familiar with the matter", the provinces of Gansu, Guizhou, and Inner Mongolia are offering a 50% discount on industrial power price to AI datacenters in the region. These cuts reportedly come on top of direct cash incentives, and ought to bring the price of one kWh of industrial power down to 0.4 Yuan, or around 5.6 cents USD. FT's sources claim the cash incentives alone are good enough to run a data center for about a year. These inner provinces are fairly flush with power generation, and the base pricing is around 30% cheaper than the coastal regions. China's power grid is seemingly well-suited to handling the AI-driven power draw, a fact that's not hard to believe given the country's massive push towards renewable energy sources. This move comes in sequence of the Chinese government outright banning the usage of Nvidia AI chips. The ban immediately pushed AI datacenter power usage by a reported 30 to 50%, as the efficiency of Chinese chips lags behind that of Nvidia's H20. It's worth noting that H20 is from the Grace Hopper generation rather than the fresh Blackwell offerings. The newer chips are export-controlled by the U.S., but the power efficiency delta between Blackwell and Chinese chips would be greater still. China is in the middle of a push for independence from US chip companies, while simultaneously boosting national chip production. The country has long since lagged in chip development but has made long strides in the past decade. Even if the national chips aren't yet quite comparable to Nvidia and AMD's offerings, the speed at which the country is catching up is impressive. Huawei, Cambricon, Alibaba, and Biren all make AI accelerators, with Huawei in the national lead with its Ascend 910C chip.

China bans Nvidia, AMD, and Intel AI chips from state-funded data centers, orders removal from new builds

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? China's push for companies to use home-grown AI chips has taken a surprising turn. According to reports, Beijing now mandates that any new data center projects that receive government funds cannot use foreign AI accelerators. The new rules also apply to current builds less than 30% complete, so Nvidia, AMD, and Intel chips already installed will have to be removed. The Chinese government has issued guidance on the requirements that new or early-stage data centers use only domestic AI chips, writes Reuters, which cites two people familiar with the matter. While projects under 30% complete will be required to remove all installed chips, or cancel their purchase orders, those at a more advanced stage will be assessed on a case-by-case basis. Reuters notes that most data centers in China have received some form of state funding to aid their construction, with more than $100 billion being directed to these projects over the last two years. Also read: Senate bill aims to restrict advanced AI GPU exports, prioritize US buyers The sources added that it was unclear if the guidance applied nationally or only to certain provinces. Some projects have already been suspended before breaking ground as a result of the directive, including one in a northwest province that planned to use Nvidia chips. The pace at which China has been encouraging local companies to drop foreign AI chips in favor of domestic alternatives has risen in recent times, partly spurred by the ongoing trade war with the US. In August, following the announcement that Washington would take a 15% cut of sales from AI chips sold to China in exchange for export licenses, the Chinese government started urging companies to avoid Nvidia H20 chips. The country's Ministry of Industry and Information Technology (MIIT) wanted big Chinese firms, including Alibaba and TikTok parent ByteDance, to explain why they opted for the H20 instead of homemade rival products. Unlike the H200 and B200, the US doesn't restrict H20 chips from being exported to China. But Chinese state media previously reported that the H20 GPUs were unsafe, outdated, and bad for the environment, and many companies use the gray market to acquire more advanced accelerators. However, China has ordered local firms to stop smuggling these restricted chips into the country. The news will come as a blow to US chip firms, especially Nvidia, which at one point saw the Chinese market account for 20% to 25% of its total data center revenue.

Raising a digital digit to Nvidia, China reportedly set to ban foreign-made AI chips from state-funded data centers

Nvidia's hopes of returning to the Chinese market continue to dwindle. New data centre projects in China must use homegrown AI hardware going forward. According to Reuters, new government guidance will soon be passed down, apparently requiring state-funded data centres to only use AI chips manufactured domestically within China. Though data centre projects have drawn $100 billion in state funding since 2021, it is not yet clear how many will be affected by this decree. It's China's latest bid to break away from US-made tech, and follows news back in August that data centre operators were being instructed to source at least 50% of their chips from domestic manufacturers. Now, data centres that are less than 30% complete are being instructed to remove already installed chips if they're foreign-made. One facility in a northwestern province that planned to deploy Nvidia chips has allegedly already been suspended before even breaking ground as a result of the latest guidance. However, it's being decided on a case-by-case basis whether data centre projects at a more advanced stage can keep their foreign-made chips. Reuters' sources say it's not yet clear if this guidance will be a nationwide decree, or only apply to certain provinces. It's also not yet clear which regulatory body within the Chinese government is issuing the order. Though Reuters reached out directly to both The Cyberspace Administration of China and the National Development and Reform Commission for comment, neither body responded. When it comes to the AI arms race, both China and the US have been drawing lines in the sand for some time. Most recently, US president Donald Trump said in an interview with CBS's 60 Minutes that "We will not let anybody have [the most advanced AI chips] other than the United States." These comments, coupled with China's latest data centre edict, may have come as a surprise considering recent news that the US and China had agreed on a one-year trade truce. It's important to note that the AI Blackwell chips made by Nvidia -- a US-based company whose business in China has apparently gone "from 95% market share to 0%" due to recent trade and tariff tribulations -- were not part of these recent negotiations. Reuters reports that the latest data centre guidance does also cover Nvidia's H20 chips, the most powerful AI chips the company is allowed to sell in China. This follows news from September of a number of Chinese tech firms banned from buying these very chips. Nvidia CEO Jensen Huang said at the time, "We can only be in service of a market if the country wants us to be. I'm disappointed with what I see." Back then, Huang went on to say more hopefully, "But they have larger agendas to work out between China and the US, and I'm understanding of that. We are patient about it." Unfortunately, it appears those hopes may soon be properly dashed.

Exclusive-China Bans Foreign AI Chips From State-Funded Data Centres, Sources Say

(Reuters) -The Chinese government has issued guidance requiring new data centre projects that have received any state funds to only use domestically-made artificial intelligence chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centres that are less than 30% complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage will be decided on a case-by-case basis, the sources said. The move could represent one of China's most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a pause in trade hostilities between Washington and Beijing, and achieve its quest for AI chip self-sufficiency. China's access to advanced AI chips, including those made by Nvidia, has been a key point of friction with the U.S., as the two wrestle for dominance in high-end computing power and AI. U.S. President Donald Trump said in an interview aired on Sunday following talks with Chinese President Xi Jinping last week that Washington will "let them deal with Nvidia but not in terms of the most advanced" chips. The latest move by Beijing, however, would dash Nvidia's hopes of regaining Chinese market share, while giving local rivals, including Huawei, yet another opportunity to secure more chip sales. It is unclear whether the guidance applies nationwide or only to certain provinces, sources said. The sources did not identify which Chinese regulatory bodies had issued the order. They declined to be named due to the sensitivity of the matter. Besides Nvidia, other foreign chipmakers that sell data centre chips to China include AMD and Intel. The Cyberspace Administration of China and the National Development and Reform Commission, two of Beijing's most powerful regulators, did not respond to requests for comment. Nvidia and AMD did not respond, while Intel declined to comment. NVIDIA THE BIGGEST CASUALTY AI data centre projects in China have drawn over $100 billion in state funding since 2021, according to a Reuters review of government tenders. Most data centres in China have received some form of state funding to aid their construction, but it is not immediately clear how many projects are subject to the new guidance. Some projects have already been suspended before breaking ground as a result of the directive, including a facility in a northwestern province that had planned to deploy Nvidia chips, one of the sources said. The project, being developed by a private technology company that received state funding, has been put on hold, the source said. Beijing has long been irked by Washington's export controls aimed at impeding China's tech progress and has taken a series of measures, including retaliatory moves, to wean itself off U.S. technology. The U.S. has justified its restrictions by alleging the Chinese military would use the chips to increase its capabilities. China discouraged local tech giants from purchasing advanced Nvidia chips over security concerns this year, while showing off a new data centre powered solely by domestic AI chips. And in 2023, Beijing banned the use of Micron's products in its critical infrastructure, which paved the way for a decision this year by the largest U.S. memory chipmaker to exit the server chip market in China, Reuters reported last month. Nvidia CEO Jensen Huang has repeatedly lobbied Trump and his cabinet to allow the sale of more AI chips to China, arguing that keeping its superpower rival's AI industry dependent on U.S. hardware was good for America's interests. Its current share of the Chinese AI chip market is zero, compared to 95% in 2022, according to the company. Excluding foreign chipmakers like Nvidia from big state projects would eliminate a significant portion of their China revenue, even as a deal is agreed to allow the resumption of advanced chip sales to China. The new guidance on data centres covers Nvidia's H20 chips, the most advanced AI chip the U.S. firm is allowed to sell to China, but also more powerful processors such as the B200 and H200, the sources said. While the B200 and H200 are barred from being shipped to China by U.S. export controls, they remain widely available in China through grey-market channels. BOON AND RISKS FOR DOMESTIC FIRMS With the latest directive, the Chinese government is carving out even more market share for domestic chipmakers. China has a range of AI chip companies, from the most prominent, Huawei Technologies, to smaller players such as Shanghai-listed Cambricon and startups including MetaX, Moore Threads, and Enflame. Products from these Chinese companies already rival some of Nvidia's offerings, but they have struggled to crack the market. Developers used to Nvidia's reliable software ecosystem have been reluctant to adopt domestic alternatives. While the move would help boost sales of domestically developed chips, it also risks widening the U.S.-China gap in AI computing power. U.S. tech giants like Microsoft, Meta, and OpenAI have spent or allocated hundreds of billions of dollars to build data centres powered by Nvidia's most advanced chips. Meanwhile, leading Chinese chip manufacturers like SMIC are facing supply constraints due to U.S. sanctions on semiconductor manufacturing equipment that have hit advanced chip production capacity. (Reporting by China Newsroom; Editing by Eduardo Baptista, Miyoung Kim and Sonali Paul)

US to block Nvidia's sale of scaled-down AI chips to China, The Information reports - The Economic Times

The White House has informed other federal agencies that it will not permit Nvidia to sell its latest scaled-down AI chips to China, The Information reported on Thursday, citing three people familiar with the matter. Nvidia has provided samples of the chip to several of its Chinese customers, according to the report. The chip, known as the B30A, can be utilised to train large language models when efficiently arranged in large clusters, a capability many Chinese companies require, the report added. The chip, known as the B30A, can be utilised to train large language models when efficiently arranged in large clusters, a capability many Chinese companies require, the report added. An Nvidia spokesperson told Reuters that the company has "zero share in China's highly competitive market for datacenter compute, and do not include it in our guidance." White House did not immediately respond to Reuters' request for a comment. Nvidia is working on modifying the B30A's design in hopes that the U.S. administration will reconsider its stance, the The Information report said, citing two company employees. The California-based company, however, has also been facing regulatory headwinds in China. Beijing has recently issued guidance requiring all new data center projects that receive any state funding to use only domestically developed chips, Reuters reported on Wednesday, citing sources familiar with the matter. Data centers that are less than 30% complete will have to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage will be reviewed on a case-by-case basis, the sources added. The guidance effectively shuts out Nvidia and its AI chips from a lucrative market segment, including advanced models under US export controls that are nevertheless available in China via grey market channels.

Trump Administration Plans To Bar Nvidia From Selling Modified AI Chips To China Just Days After Jensen Huang Said Beijing Will Win AI Race: Report - NVIDIA (NASDAQ:NVDA)

The Donald Trump administration has reportedly decided to block Nvidia Corp.'s (NASDAQ:NVDA) sale of its latest scaled-down AI chip to China, tightening export restrictions just days after CEO Jensen Huang warned that Beijing could surpass the U.S. in the global artificial intelligence race. US Tightens Grip On AI Chip Exports The Trump administration has informed federal agencies that it will not allow Nvidia to sell its newest modified AI processor, the B30A, to China, reported Reuters, via The Information. Nvidia had designed the B30A as a compliant chip to meet existing U.S. export limits, offering reduced performance compared with its flagship H100. However, officials reportedly determined that even this version could still be used to train large-scale language models -- a key capability in advanced AI systems. Nvidia has already provided samples of the chip to some Chinese customers, the report said. "We have zero share in China's highly competitive market for datacenter compute, and do not include it in our guidance." a Nvidia spokesperson said in a statement to Benzinga. See Also: Intel Wraps Up Altera Stake Sale In Bid To Streamline Business Huang Warns US Risks Falling Behind The decision follows comments from Nvidia CEO Jensen Huang, who told the Financial Times this week that China's massive developer base and rapidly expanding AI ecosystem could allow it to defeat the U.S. in the AI race unless Washington accelerates innovation. After his remarks stirred debate in Washington, Huang shared a message on X, formerly Twitter, saying that "As I have long said, China is nanoseconds behind America in AI. It is vital that America wins by racing ahead and winning developers worldwide." On Thursday, a group of Republican senators commended President Donald Trump for his decision to block Nvidia from selling its most advanced artificial intelligence chips to China. Beijing Pushes For Chip Independence At the same time, China is moving to reduce dependence on U.S. technology. Previously, it was reported that Beijing has instructed that any state-funded data center projects must use only domestically developed chips. Facilities less than 30% complete must replace or cancel all foreign chip orders, while others will be reviewed individually -- effectively shutting Nvidia out of a key segment. Despite regulatory headwinds, Nvidia remains the world's most valuable semiconductor company, currently valued at $4.57 trillion after briefly surpassing the $5 trillion mark in October. At its GTC developer conference last month, Huang revealed Nvidia has secured more than $500 billion in chip orders through 2026. Price Action: Nvidia closed at $188.08 on Thursday, down 3.65%, with shares rising 0.85% to $189.68 in after-hours trading, according to Benzinga Pro. Benzinga's Edge Stock Rankings place the chipmaker in the 98th percentile for Growth and 93rd for Quality, underscoring its robust performance compared to industry peers. Read Next: Trump Turnberry Is 'Our Monalisa' Says Eric Trump As He Shrugs Off Millions In Losses -- 'We Don't Give A...' Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo: Chung-Hao-Lee / Shutterstock NVDANVIDIA Corp$189.68-2.83%OverviewMarket News and Data brought to you by Benzinga APIs

China Is Actually Subsidizing Electricity to Cover Up the 'Terrible' Power Efficiency of Domestic AI Chips, Slashing Data Center Bills by Up to 50%

China is reportedly providing energy incentives to domestic CSPs to keep them attracted to the 'power hungry' AI chips from Huawei and Cambricon. Well, after voting "100% no" to NVIDIA's AI chips, it seems like the Chinese AI industry is currently reliant on domestic solutions being offered, which are claimed to be 'terrible' when it comes to performance-per-watt figures. Based on a report by the Financial Times, Chinese chips are "30% to 50%" less power efficient compared to the H20 AI chip from NVIDIA, which means that electricity bills have gone through the roof. However, the administration has stepped up to mitigate the problem by providing substantial incentives to data centers that run local AI chips. Local governments in data centre-heavy provinces such as Gansu, Guizhou and Inner Mongolia have responded by offering subsidies that slash big data centres' electricity bills by as much as 50 per cent, provided that they are powered by domestic chips. Data centres using chips from foreign vendors such as Nvidia are not qualified for such entitlements, the people said. One way companies like Huawei pledge to offer performance rivaling NVIDIA's top-end AI solutions is by increasing power consumption numbers or combining 'thousands' of AI chips into a single cluster, which has energy ratings significantly higher than those of systems like Blackwell. However, China's robust grid system appears to be sufficient to run its domestic tech stack, and driven by the incentives local administrations are offering, it seems that the inclination towards Huawei and other Chinese chip manufacturers will increase. It seems that China, as a nation, will not allow the influence of American technology to enter the industry anytime soon, and with that, the domestic industry will be deprived of high-end computing capabilities. It would take the local AI industry years to compete with rivaling offerings from NVIDIA. Apart from just getting the architecture in place, China still needs to establish sufficient production lines, which include semiconductors, HBM, and advanced packaging.

China bans foreign AI chips from state-funded data centres

China has ordered state-funded data centres to use only locally made AI chips, forcing those under 30% complete to remove foreign processors like Nvidia's. The move boosts domestic firms such as Huawei but threatens foreign chipmakers' revenues, underscoring China's push for AI self-reliance amid ongoing U.S. tech restrictions. The Chinese government has issued guidance requiring new data centre projects that have received any state funds to only use domestically-made artificial intelligence chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centres that are less than 30% complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage will be decided on a case-by-case basis, the sources said. The move could represent one of China's most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a pause in trade hostilities between Washington and Beijing, and achieve its quest for AI chip self-sufficiency. China's access to advanced AI chips, including those made by Nvidia, has been a key point of friction with the U.S., as the two wrestle for dominance in high-end computing power and AI. US President Donald Trump said in an interview aired on Sunday following talks with Chinese President Xi Jinping last week that Washington will "let them deal with Nvidia but not in terms of the most advanced" chips. The latest move by Beijing, however, would dash Nvidia's hopes of regaining Chinese market share, while giving local rivals, including Huawei, yet another opportunity to secure more chip sales. It is unclear whether the guidance applies nationwide or only to certain provinces, sources said. The sources did not identify which Chinese regulatory bodies had issued the order. They declined to be named due to the sensitivity of the matter. Besides Nvidia, other foreign chipmakers that sell data centre chips to China include AMD and Intel. The Cyberspace Administration of China and the National Development and Reform Commission, two of Beijing's most powerful regulators, did not respond to requests for comment. Nvidia and AMD did not respond, while Intel declined to comment. Nvidia the biggest casuality AI data centre projects in China have drawn over $100 billion in state funding since 2021, according to a Reuters review of government tenders. Most data centres in China have received some form of state funding to aid their construction, but it is not immediately clear how many projects are subject to the new guidance. Some projects have already been suspended before breaking ground as a result of the directive, including a facility in a northwestern province that had planned to deploy Nvidia chips, one of the sources said. The project, being developed by a private technology company that received state funding, has been put on hold, the source said. Beijing has long been irked by Washington's export controls aimed at impeding China's tech progress and has taken a series of measures, including retaliatory moves, to wean itself off U.S. technology. The U.S. has justified its restrictions by alleging the Chinese military would use the chips to increase its capabilities. China discouraged local tech giants from purchasing advanced Nvidia chips over security concerns this year, while showing off a new data centre powered solely by domestic AI chips. And in 2023, Beijing banned the use of Micron's products in its critical infrastructure, which paved the way for a decision this year by the largest U.S. memory chipmaker to exit the server chip market in China, Reuters reported last month. Nvidia CEO Jensen Huang has repeatedly lobbied Trump and his cabinet to allow the sale of more AI chips to China, arguing that keeping its superpower rival's AI industry dependent on U.S. hardware was good for America's interests. Its current share of the Chinese AI chip market is zero, compared to 95% in 2022, according to the company. Excluding foreign chipmakers like Nvidia from big state projects would eliminate a significant portion of their China revenue, even as a deal is agreed to allow the resumption of advanced chip sales to China. The new guidance on data centres covers Nvidia's H20 chips, the most advanced AI chip the U.S. firm is allowed to sell to China, but also more powerful processors such as the B200 and H200, the sources said. While the B200 and H200 are barred from being shipped to China by U.S. export controls, they remain widely available in China through grey-market channels. Boon and risks for domestic firms With the latest directive, the Chinese government is carving out even more market share for domestic chipmakers. China has a range of AI chip companies, from the most prominent, Huawei Technologies, to smaller players such as Shanghai-listed Cambricon and startups including MetaX, Moore Threads, and Enflame. Products from these Chinese companies already rival some of Nvidia's offerings, but they have struggled to crack the market. Developers used to Nvidia's reliable software ecosystem have been reluctant to adopt domestic alternatives. While the move would help boost sales of domestically developed chips, it also risks widening the U.S.-China gap in AI computing power. U.S. tech giants like Microsoft, Meta, and OpenAI have spent or allocated hundreds of billions of dollars to build data centres powered by Nvidia's most advanced chips. Meanwhile, leading Chinese chip manufacturers like SMIC are facing supply constraints due to U.S. sanctions on semiconductor manufacturing equipment that have hit advanced chip production capacity.

Chinese government bans use of foreign AI chips in state-funded data centers

China has issued guidance to new data center projects that have received any state funds to only use locally made AI chips, Reuters reported, citing people with knowledge of the matter. Shares of Advanced Micro Devices (AMD) fell about China's mandate is likely to reduce Nvidia and AMD sales as data centers must remove or avoid foreign AI chips, leading to potential loss of market share in China. China's policy is expected to boost sales and market share for local AI chipmakers such as Huawei, Cambricon, MetaX, Moore Threads, and Enflame. The restrictions may widen the AI computing power gap in favor of the U.S., as U.S. companies retain advanced Nvidia chips while China's access to such technology is reduced.

China Reportedly Bans Foreign AI Chips In State-Funded Data Centers In A Blow To Nvidia, AMD - Alibaba Gr Hldgs (NYSE:BABA), Advanced Micro Devices (NASDAQ:AMD)

Beijing has reportedly issued a directive banning foreign artificial intelligence (AI) chips in state-funded data centers amid an intensifying U.S.-China tech war. State Projects Under 30% Completion In Focus China's government has mandated that new data center projects receiving state funding must exclusively use domestically produced artificial intelligence chips, Reuters reported on Wednesday. The directive targets data centers that are under 30% complete, requiring them to eliminate all foreign chips or abandon any plans to acquire them, according to the report. Projects nearing completion will be evaluated individually on a case-by-case basis. According to another report on Tuesday, China had boosted subsidies for major data centers, slashing their energy bills by up to 50% to support domestic chipmakers and strengthen global competitiveness. This move was aimed at supporting domestic chipmakers and strengthening China's global competitiveness. See Also: Mark Cuban Says He Ran A 'Ponzi Scheme' In The 80s To Pay For College. 'It Was Basically A Scam' Nvidia Caught In The Crosshairs The use of advanced AI chips in China, including those manufactured by Nvidia (NASDAQ:NVDA), has been a point of contention with the U.S. The recent directive could potentially hinder Nvidia's aspirations to recapture market share in China, while offering domestic rivals like Huawei a chance to increase their chip sales. In mid-October, Alibaba Group Holding (NYSE:BABA) unveiled a new computing pooling system named Aegaeon, designed to cut reliance on Nvidia GPUs for AI models by an impressive 82%. At the same time, President Donald Trump had declared that Nvidia's advanced Blackwell AI chip would not be available for "other people." This decision was made amid concerns about the potential sale of a scaled-down version to China. Despite these challenges, Nvidia's CEO Jensen Huang remains optimistic about the potential to resume sales of the chipmaker's advanced chips in China. However, he emphasized the importance of addressing U.S. national security concerns. Apart from Nvidia, other U.S. chipmakers supplying data center chips to China include Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC). Price Action: Over the past year, shares of Nvidia, AMD, and Intel surged 42.01%, 76.51%, and 58.79%, respectively, as per data from BenzingaPro. READ NEXT: China Eases US Tariffs, Scraps Farm Levies As Trump Cuts Fentanyl Duties In Fresh Trade Truce Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. AMDAdvanced Micro Devices Inc$236.79-5.30%OverviewBABAAlibaba Group Holding Ltd$163.55-0.46%INTCIntel Corp$36.53-1.35%NVDANVIDIA Corp$196.32-1.19%Market News and Data brought to you by Benzinga APIs

China offers tech giants cheap power to boost domestic AI chips, FT reports

China has increased subsidies that cut energy bills by up to half for some of the country's largest data centres. Local governments have beefed up incentives to help Chinese tech giants such as ByteDance, Alibaba and Tencent , which have been hit with higher electricity costs following Beijing's ban on purchasing Nvidia's artificial intelligence chips. China has increased subsidies that cut energy bills by up to half for some of the country's largest data centres, the Financial Times reported on Monday, citing people familiar with the matter. Local governments have beefed up incentives to help Chinese tech giants such as ByteDance, Alibaba and Tencent , which have been hit with higher electricity costs following Beijing's ban on purchasing Nvidia's artificial intelligence chips, the newspaper reported. Reuters could not immediately confirm the report.

China Cuts Data Center Energy Costs By 50% With Major Subsidies To Boost Domestic Chip Industry: Report - Alibaba Gr Hldgs (NYSE:BABA), NVIDIA (NASDAQ:NVDA)

China has boosted subsidies for major data centers, slashing their energy bills by up to 50% to support domestic chipmakers and strengthen global competitiveness, according to a report. Chinese Tech Giants Grapple With High Energy Costs Several local governments in provinces with a high concentration of data centers, such as Gansu, Guizhou, and Inner Mongolia, have introduced these incentives, the Financial Times reported on Tuesday. These cater to tech behemoths like ByteDance, Alibaba Group Holding Ltd. (NYSE:BABA), and Tencent Holdings Ltd. (OTC:TCEHY) as these firms have been dealing with soaring electricity costs due to Beijing's prohibition on buying AI chips from Nvidia Corporation (NASDAQ:NVDA). Industry insiders revealed that the subsidies were introduced after tech firms raised concerns over the higher costs of using less efficient domestic chips from Huawei and Cambricon, according to the report. Despite the higher energy costs tied to domestic chip production, China's centralized power grid continues to provide electricity that is both cheaper and cleaner than in the U.S., with no signs of shortage, the FT reported. As a result, energy-abundant remote provinces have emerged as key hubs for data center clusters. See Also: Peter Schiff: Bitcoin Depends On 'Growing Supply Of Fools' -- And Technical Analysis Says He's Not Wrong China Sidesteps Curbs, Pushes AI Self-Reliance China's move is part of a long-term strategy to cut reliance on foreign chipmakers. A top government adviser warned that the Xi Jinping-led nation should abandon the accelerators popularized by Nvidia and instead focus on developing domestic chips for artificial intelligence. In October, a Congress report revealed that China had reportedly managed to bypass U.S. export controls and purchase about $38 billion worth of sophisticated chipmaking equipment from the U.S. and its allies due to gaps in efforts to curb manufacturing. Adding to these developments, Alibaba introduced a new computing pooling system called Aegaeon, which dramatically reduced the reliance on Nvidia GPUs by 82% for AI models. Nvidia's China Woes The increased subsidies come in the wake of President Donald Trump's declaration that Nvidia's advanced Blackwell AI chip will not be available for "other people," as a strategic move to keep the technology out of China's reach. However, Nvidia CEO Jensen Huang stated that China already has a strong semiconductor ecosystem and that collaboration benefits both nations. He described China as an irreplaceable and "dynamic market." Despite the ban, CNBC commentator Jim Cramer argued that the policy still leaves Nvidia with "a lot of latitude" to operate in China, emphasizing that Trump has not "banned Nvidia from China." READ NEXT: Nvidia Rallies As Microsoft Expands AI Infrastructure In Middle East With US Backing Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. BABAAlibaba Group Holding Ltd$167.00-2.01%OverviewNVDANVIDIA Corp$206.602.03%TCEHYTencent Holdings Ltd$80.63-0.91%Market News and Data brought to you by Benzinga APIs

White House Slams Brakes on NVIDIA's AI Chip Sales to China

US Blocks Nvidia's B30A AI Chip Exports to China Amid Rising Tech Tensions The White House has informed other federal agencies that NVIDIA will not be allowed to sell its most advanced AI chip, the B30A, to Chinese customers. The move marks a major escalation in the US-China tech rivalry. The decision effectively extends the Washington export restrictions to include even scaled-down versions of the chip giant's powerful AI hardware, according to The Information. The B30A chip, though designed to meet previous limits on exports, can still be used in large clusters to train large language models. This is a use that US officials reportedly deem too advanced to export to China. This action is part of the United States' broader strategy to halt the transfer of advanced technology to China, which could support the development of the latter's AI-driven military capabilities.

US to block Nvidia from selling scaled-back AI chips to China- The Information By Investing.com

Investing.com-- The Donald Trump administration plans to block NVIDIA Corporation (NASDAQ:NVDA) from selling even its less powerful artificial intelligence chips to China, The Information reported on Thursday, citing three people familiar with the matter. The White House has informed federal agencies that Nvidia will not be allowed to sell the B30A chip, to China, the report said. Nvidia had provided samples of the chip to several Chinese customers, according to the Information report. The B30A was developed by Nvidia to be more powerful than the H20 model it is currently allowed to sell in the country, reports earlier this year had shown. Nvidia, which makes the most advanced artificial intelligence chips in the market, became a bargaining chip in a bitter U.S.-China trade war this year, with the company being temporarily blocked from selling chips to China, even the China-specific H20. While cooling U.S.-China trade tensions had seen the White House reapprove Nvidia's China sales, the company also faced renewed resistance from Beijing as the Chinese government pushed for complete self-reliance in AI, with chips being a major part of this push. Nvidia said earlier this year that it will no longer include China in its revenue and profit forecasts. CEO Jensen Huang has constantly treaded a fine line between maintaining ties with China while avoiding ire from the White House- a balance that has been further challenged by the Trump administration's hardline stance against Beijing. Huang said earlier this week that China could win the AI race thanks to cheaper energy costs and looser regulations.

Chinese chipmakers jump on report of foreign AI chip restrictions By Investing.com

Investing.com-- Shares of Chinese chipmakers rose sharply on Thursday after a Reuters report said Beijing plans to ban the use of foreign-made artificial intelligence chips in state-funded data centres. The guidance, according to the report, directs new government-backed data centre projects to use only domestically produced AI chips. Projects that have already installed foreign chips but are less than 30% complete will be required to remove or cancel them, the report said on Wednesday, citing sources familiar with the matter. Cambricon Technologies Corp (SS:688256) surged 7% in Shanghai trading, while Hong Kong-listed Semiconductor Manufacturing International Corp (SMIC) (HK:0981) jumped 5%. Hua Hong Semiconductor (HK:1347) shares rose 4%, while Meituan (HK:3690) stock gained 2% in Hong Kong trading. Hong Kong's Hang Seng TECH sun-index jumped over 2% on Thursday. The move underscores Beijing's determination to achieve self-sufficiency in advanced chipmaking and reduce reliance on U.S. suppliers such as NVIDIA Corporation (NASDAQ:NVDA). The decision comes after the U.S. administration said that Nvidia's most advanced Blackwell AI chips were reserved for domestic use and would not be given to China due to national security concerns.

US to block Nvidia's sale of scaled-down AI chips to China, The Information reports

(Reuters) -The White House has informed other federal agencies that it will not permit Nvidia to sell its latest scaled-down AI chips to China, The Information reported on Thursday, citing three people familiar with the matter. Nvidia has provided samples of the chip to several of its Chinese customers, according to the report. The chip, known as the B30A, can be utilized to train large language models when efficiently arranged in large clusters, a capability many Chinese companies require, the report added. Nvidia is working on modifying the B30A's design in hopes that the U.S. administration will reconsider its stance, the report said, citing two company employees. An Nvidia spokesperson told Reuters that the company has "zero share in China's highly competitive market for datacenter compute, and do not include it in our guidance." White House did not immediately respond to Reuters' request for a comment. (Reporting by Shivani Tanna and Devika Nair in Bengaluru; Editing by Sherry Jacob-Phillips)

Exclusive - China bans foreign AI chips from state-funded data centres, sources say

(Reuters) - The Chinese government has issued guidance requiring new data centre projects that have received any state funds to only use domestically-made artificial intelligence chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centres that are less than 30% complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage will be decided on a case-by-case basis, the sources said. The move could represent one of China's most aggressive steps yet to eliminate foreign technology from its critical infrastructure amid a pause in trade hostilities between Washington and Beijing, and achieve its quest for AI chip self-sufficiency. China's access to advanced AI chips, including those made by Nvidia, has been a key point of friction with the U.S., as the two wrestle for dominance in high-end computing power and AI. U.S. President Donald Trump said in an interview aired on Sunday following talks with Chinese President Xi Jinping last week that Washington will "let them deal with Nvidia but not in terms of the most advanced" chips. The latest move by Beijing, however, would dash Nvidia's hopes of regaining Chinese market share, while giving local rivals, including Huawei, yet another opportunity to secure more chip sales. It is unclear whether the guidance applies nationwide or only to certain provinces, sources said. The sources did not identify which Chinese regulatory bodies had issued the order. They declined to be named due to the sensitivity of the matter. Besides Nvidia, other foreign chipmakers that sell data centre chips to China include AMD and Intel. The Cyberspace Administration of China and the National Development and Reform Commission, two of Beijing's most powerful regulators, did not respond to requests for comment. Nvidia and AMD did not respond, while Intel declined to comment. NVIDIA THE BIGGEST CASUALTY AI data centre projects in China have drawn over $100 billion in state funding since 2021, according to a Reuters review of government tenders. Most data centres in China have received some form of state funding to aid their construction, but it is not immediately clear how many projects are subject to the new guidance. Some projects have already been suspended before breaking ground as a result of the directive, including a facility in a northwestern province that had planned to deploy Nvidia chips, one of the sources said. The project, being developed by a private technology company that received state funding, has been put on hold, the source said. Beijing has long been irked by Washington's export controls aimed at impeding China's tech progress and has taken a series of measures, including retaliatory moves, to wean itself off U.S. technology. The U.S. has justified its restrictions by alleging the Chinese military would use the chips to increase its capabilities. China discouraged local tech giants from purchasing advanced Nvidia chips over security concerns this year, while showing off a new data centre powered solely by domestic AI chips. And in 2023, Beijing banned the use of Micron's products in its critical infrastructure, which paved the way for a decision this year by the largest U.S. memory chipmaker to exit the server chip market in China, Reuters reported last month. Nvidia CEO Jensen Huang has repeatedly lobbied Trump and his cabinet to allow the sale of more AI chips to China, arguing that keeping its superpower rival's AI industry dependent on U.S. hardware was good for America's interests. Its current share of the Chinese AI chip market is zero, compared to 95% in 2022, according to the company. Excluding foreign chipmakers like Nvidia from big state projects would eliminate a significant portion of their China revenue, even as a deal is agreed to allow the resumption of advanced chip sales to China. The new guidance on data centres covers Nvidia's H20 chips, the most advanced AI chip the U.S. firm is allowed to sell to China, but also more powerful processors such as the B200 and H200, the sources said. While the B200 and H200 are barred from being shipped to China by U.S. export controls, they remain widely available in China through grey-market channels. BOON AND RISKS FOR DOMESTIC FIRMS With the latest directive, the Chinese government is carving out even more market share for domestic chipmakers. China has a range of AI chip companies, from the most prominent, Huawei Technologies, to smaller players such as Shanghai-listed Cambricon and startups including MetaX, Moore Threads, and Enflame. Products from these Chinese companies already rival some of Nvidia's offerings, but they have struggled to crack the market. Developers used to Nvidia's reliable software ecosystem have been reluctant to adopt domestic alternatives. While the move would help boost sales of domestically developed chips, it also risks widening the U.S.-China gap in AI computing power. U.S. tech giants like Microsoft, Meta, and OpenAI have spent or allocated hundreds of billions of dollars to build data centres powered by Nvidia's most advanced chips. Meanwhile, leading Chinese chip manufacturers like SMIC are facing supply constraints due to U.S. sanctions on semiconductor manufacturing equipment that have hit advanced chip production capacity. (Reporting by China Newsroom; Editing by Eduardo Baptista, Miyoung Kim and Sonali Paul)