The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters.
In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would 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.
Photo: Reuters
China’s access to advanced AI chips, including those made by Nvidia Corp, has been a key point of friction with the US, as the two wrestle for dominance in high-end computing power and AI.
US President Donald Trump in an interview aired on Sunday following talks with Chinese President Xi Jinping (習近平) last week said that Washington would “let them deal with Nvidia, but not in terms of the most advanced” chips.
However, the latest move by Beijing would dash Nvidia’s hopes of regaining its Chinese market share, while giving local rivals, including Huawei Technologies Co (華為), yet another opportunity to secure more chip sales.
Besides Nvidia, other foreign chipmakers that sell data center chips to China include Advanced Micro Devices Inc and Intel Corp.
AI data center projects in China have drawn more than US$100 billion in state funding since 2021, according to a Reuters review of government tenders. Most data centers 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.
China discouraged local tech giants from purchasing advanced Nvidia chips over security concerns this year, while showing off a new data center powered solely by domestic AI chips.
Nvidia’s current share of the Chinese AI chip market is zero, compared with 95 percent in 2022, according to the company.
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, to smaller players such as Shanghai-listed Cambricon Technologies Corp (寒武紀) and start-ups including MetaX Integrated Circuits Co (沐曦), Moore Threads Technology Co (摩爾) and Enflame Technology Co (燧原).
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 US-China gap in AI computing power.
Meanwhile, leading Chinese chip manufacturers like Semiconductor Manufacturing International Corp (中芯) are facing supply constraints due to US sanctions on semiconductor manufacturing equipment that have hit advanced chip production capacity.
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The Chinese government has issued guidance requiring new data center projects that have received any state funds to only use domestically made artificial intelligence (AI) chips, two sources familiar with the matter told Reuters. In recent weeks, Chinese regulatory authorities have ordered such data centers that are less than 30 percent complete to remove all installed foreign chips, or cancel plans to purchase them, while projects in a more advanced stage would 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
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