Beijing (Brussels Morning Newspaper) – The Chinese government has issued guidance mandating that any new data centre projects receiving state funding must exclusively use domestically-produced artificial intelligence (AI) chips, two sources familiar with the matter revealed, Reuters reported.
In recent weeks, Chinese regulators instructed data centres that are no more than 30% complete to remove all foreign chips that were previously installed or to cancel orders for the chips in question. According to the sources, data centres with projects further advanced would be handled on a case-by-case basis.
How will the new guidance affect state-funded projects?
According to the sources, several projects have already been put on hold before the construction has even started due to the order, such as a facility in a northwestern province that was intended to use Nvidia chips. The project is owned by a privately-owned tech company that has received state funding, according to the source.
How is Washington’s export control influencing Beijing’s decision?
Beijing has long been irritated with Washington’s export controls designed to hinder China’s technology progress, and has implemented a number of measures, including retaliatory measures, to lessen its reliance on U.S. technology.
China’s access to advanced AI chips, such as those produced by Nvidia, has been a major source of tension. U.S. President Donald Trump said in an interview, following discussions 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 U.S. has justified its restrictions by alleging that the Chinese military would use the chips to increase its capabilities. This year, China discouraged local tech giants from buying advanced Nvidia chips due to security concerns, while they showcased a new data centre run entirely by domestic AI chips.
How might U.S. restrictions impact China’s AI ambitions?
In 2023, Beijing prohibited the use of Micron’s products in its vital infrastructure, leading the largest U.S. memory chipmaker to withdraw from the server chip market in China, as reported by Reuters last month.
The new data centre guidance covers the H20 chips made by Nvidia—the most advanced AI chip the U.S. company can sell to China—but would also cover other advanced chips like the B200 and H200, sources said.
While the B200 and H200 can’t be sent to China due to the U.S. export restrictions, they are still widely available in China through grey-market channels.