China bans state-owned data centers from using foreign AI chips

The Chinese government has issued a directive requiring new data center projects that receive any state funding to use only domestically produced artificial intelligence (AI) chips, two sources familiar with the matter said.

In recent weeks, Chinese regulators have asked data centers with less than 30 percent completion to remove all foreign chips they have installed, or cancel plans to buy them, while projects at a more advanced stage will be decided on a case-by-case basis, sources said.

It was not clear whether the directive was applied nationwide or only in certain provinces, the sources said. They also did not specify which Chinese regulatory agency issued the order.

AI data center projects in China have attracted more than $100 billion in state funding since 2021, according to a Reuters tally of Chinese government tenders.

Most data centers in China receive some form of state funding to support construction, but it is unclear how many projects fall under the new directive.

Several projects have been suspended before they even started because of the directive, including a facility in a northwestern province that was to deploy Nvidia chips. The project, developed by a state-funded private technology company, has now been halted, one of the sources said.

The new data center directive includes Nvidia's H20 chip, the most advanced AI chip the company is allowed to sell to China, as well as more powerful processors like the B200 and H200, the sources said.

Although B200 and H200 are prohibited from being shipped to China under US export control regulations, they are still widely sold in China through unofficial channels.

The move could be one of China's most aggressive steps yet to remove foreign technology from critical infrastructure and achieve its goal of AI chip self-sufficiency, amid a lull in trade tensions between the US and China.

China's access to advanced AI chips, including those from Nvidia, has been a major point of friction with the US, as the two sides compete for dominance in high-end computing and AI.

In a recent interview, US President Donald Trump said that after talks with Chinese President Xi Jinping last week, the US will allow China to trade with Nvidia, but not for the most advanced chips.

However, the latest move by the Chinese government will dash Nvidia's hopes of regaining market share in China, while creating more opportunities for domestic rivals, including technology group Huawei, to increase chip sales.

According to Nvidia, the current market share of this “giant” in the Chinese AI chip market is zero, compared to 95% in 2022. In addition to Nvidia, AMD and Intel are also foreign chip manufacturers selling chips to data centers in China./.

(TTXVN/Vietnam+)

Source: https://www.vietnamplus.vn/trung-quoc-cam-cac-trung-tam-du-lieu-co-von-nha-nuoc-dung-chip-ai-nuoc-ngoai-post1075111.vnp