China Bans Nvidia AI Chips, Pushing for Domestic Alternatives

Reviewed byNidhi Govil

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China's Cyberspace Administration has banned major tech companies from purchasing Nvidia's AI chips, including those specially designed for the Chinese market. This move aims to boost domestic semiconductor industry and reduce reliance on foreign technology.

China Bans Nvidia AI Chips, Pushing for Domestic Alternatives

In a significant move that reshapes the landscape of artificial intelligence (AI) hardware in China, the country's Cyberspace Administration (CAC) has issued a ban on the purchase of Nvidia's AI chips by major Chinese tech companies

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. This decision affects not only Nvidia's existing products but also its specially designed chips for the Chinese market, marking a pivotal shift in China's AI strategy.

Source: Analytics Insight

Source: Analytics Insight

The Scope of the Ban

The CAC has instructed tech giants such as ByteDance and Alibaba to cease testing and cancel orders for Nvidia's RTX Pro 6000D, a GPU tailored specifically for the Chinese market

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. This ban extends beyond earlier guidance that focused on the H20, another China-only chip widely used for AI applications

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Source: Wccftech

Source: Wccftech

Motivations Behind the Decision

The Chinese government's decision appears to be driven by two main factors:

  1. Promoting Domestic Chip Industry: Beijing is intensifying efforts to boost its homegrown semiconductor industry and reduce reliance on foreign technology

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  2. Comparable Domestic Performance: Chinese regulators have concluded that domestic chips have attained performance levels comparable to Nvidia's models used in China

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The RTX Pro 6000D: A Compromised Solution

Nvidia's RTX Pro 6000D was designed to navigate U.S. export restrictions, but it faced several limitations:

  • Constrained design with no NVLink and GDDR-based memory

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  • Limited to approximately 581 teraFLOPS of FP4 and 1.4TB/s of memory bandwidth

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  • Priced at around $7,000, considered expensive for its capabilities

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Impact on Nvidia and the Chinese Market

The ban is expected to have significant implications:

  1. Financial Impact: Nvidia CEO Jensen Huang had previously estimated an $8 billion revenue loss in Q2 alone due to restrictions on selling AI chips in China

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  2. Market Shift: Chinese companies are likely to turn to domestic alternatives, such as Huawei's Ascend 910C and CloudMatrix 384, which reportedly outperform Nvidia's restricted models

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  3. Geopolitical Tensions: The ban reflects ongoing tensions between China and the U.S. in the technology sector, particularly in AI and semiconductors

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Nvidia's Response and Future Outlook

Jensen Huang expressed disappointment but understanding of the larger geopolitical context: "We can only be in service of a market if a country wants us to be. I'm disappointed with what I see, but they have larger agendas to work out between China and the US, and I'm understanding of that. We are patient about it."

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Source: Fortune

Source: Fortune

As China pushes for technological self-reliance, the global AI chip market faces a potential reshaping, with implications for international trade, technological development, and geopolitical relations in the coming years.

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