China orders local companies not to buy NVIDIA's AI chips
What's the story
China's internet regulator, the Cyberspace Administration of China (CAC), has ordered major companies like Alibaba and ByteDance to cancel their orders for NVIDIA's RTX Pro 6000D chip. The Financial Times reported this citing people familiar with the matter. The CAC asked these firms to stop testing the chip and cancel any existing orders this week.
Chip launch
Chip intended to bypass restrictions on shipments
The RTX Pro 6000D chip, launched by NVIDIA, was originally intended to bypass restrictions on advanced artificial intelligence (AI) chip shipments to China. The order to halt the chip comes as part of China's ongoing campaign against the use of NVIDIA's accelerators. These chips are critical for AI development but have been largely banned from the world's largest semiconductor market.
Market dominance
NVIDIA's pivotal role in negotiations
NVIDIA has been in the spotlight of delicate negotiations between Beijing and Washington this year, owing to its pivotal role in future technologies such as AI. The company dominates the market for chips required to build and operate AI services at companies like Meta Platforms Inc and DeepSeek. This week, China ruled that NVIDIA violated anti-monopoly laws with its $7 billion acquisition of Mellanox Technologies Ltd back in 2020.
Trade tensions
Rising trade tensions and homegrown alternatives
Days before the ruling against NVIDIA, Beijing had also announced an anti-dumping probe into a type of semiconductor made by US companies like Texas Instruments. This comes amid rising trade tensions between China and the US. Domestic firms such as Alibaba and Baidu are working on their own homegrown alternatives to reduce dependence on foreign chips.