These data centers in China can't use foreign AI chips
What's the story
China has ordered its state-funded data centers to use only home-grown artificial intelligence (AI) chips for new projects. The directive comes amid a global race for AI chip supremacy, with China's access to advanced chips from companies like NVIDIA being a major point of contention with the US. The move is seen as an aggressive step toward achieving self-sufficiency in AI chip production and reducing reliance on foreign technology.
Implementation
Regulatory authorities are enforcing removal of foreign chips
Chinese regulatory authorities have been enforcing the removal of foreign chips from data centers that are less than 30% complete. If this isn't possible, these centers must cancel plans to buy these chips. For projects that are more advanced, decisions will be made on a case-by-case basis. This move could significantly impact NVIDIA's hopes of regaining its market share in China and give local rivals like Huawei an edge in chip sales.
Market shift
Foreign chipmakers to be impacted
The directive also impacts other foreign chipmakers such as AMD and Intel, who supply data center chips to China. The move could drastically reduce their revenue from China, even if a deal is struck to allow advanced chip sales to continue. The guidance specifically targets NVIDIA's H20 chips, the most advanced AI chip the US firm can sell to China, and more powerful processors like the B200 and H200.
Domestic focus
China pushes for domestic chip production
The latest directive is part of China's larger strategy to promote its domestic chip industry. The country has a number of AI chip companies, including tech giant Huawei Technologies and smaller firms like Cambricon, MetaX, Moore Threads, and Enflame. Their products already compete with some of NVIDIA's offerings but have struggled to gain traction in the market due to developers' reluctance toward adopting domestic alternatives.