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China bans foreign AI chips from state-funded data centers, report claims — crackdown would include removing Nvidia, AMD, and Intel chips from builds in early stages
China has reportedly issued a sweeping ban on foreign AI chips in any data center backed by government money, according to a report by Reuters. The move applies retroactively to builds still in early stages, meaning accelerators from Nvidia, AMD, and Intel may need to be removed or replaced if already installed.
The report, citing unnamed sources with direct knowledge, claims regulators have instructed state-funded projects to use only Chinese-made silicon going forward. That includes domestic chips from Huawei, Cambricon, and Enflame, among others.
While the official directive has not been published, the guidance would mark a formal shift from earlier policies that merely discouraged foreign chip purchases. Under the new dictat, even parts like Nvidia’s H20 — a model specifically designed to comply with U.S. export controls — will now be off the table. This follows Chinese port crackdowns on all Nvidia imports in early October.
Projects that are less than 30% complete are allegedly being told to abandon or remove any foreign chips already in use. For Nvidia, which once held more than 90% of China’s AI accelerator market, that effectively kills prospects for a comeback via more custom silicon. Last month, Nvidia CEO Jensen Huang said that the company’s Chinese market share has effectively plummeted to zero.
The guidance appears to target not only the H20, but also Nvidia’s higher-end H200 and B200, which are restricted under U.S. export rules but have still made their way into Chinese data centers through unofficial channels. That flow of gray-market parts may now face stricter internal scrutiny, with implications for training clusters already under construction.
Over the past two years, China has funneled more than $100 billion into AI infrastructure projects, most of them aligned with provincial or national goals for data sovereignty. That public investment is what gives Beijing’s directive real teeth. But while Chinese chipmakers have made strides, they continue to trail Nvidia and AMD in software tooling and performance density. Huawei’s Ascend line, often cited as the most mature domestic option, still lacks full parity with CUDA-based stacks.
The directive comes amid heightened U.S.-China tech tensions and a broader global reordering of AI supply chains. It remains unclear whether the new policy will eventually extend to privately funded deployments.
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Luke James is a freelance writer and journalist. Although his background is in legal, he has a personal interest in all things tech, especially hardware and microelectronics, and anything regulatory.
I suppose the goal is to accelerate domestic chip technology progress. Problem is the chips China can make domestically aren't nearly as good which is why so many banned chips were smuggled in. They may be able to brute force compute power by using more domestic tech along with much higher power consumption but I doubt they will be able to compete with the absurd amounts of money foreign competitors are pouring into AI.
The race is on, and the hype associated with AI is sure to leave a trail of tears before the dust settles. At the same time I'm sure there will be a massive leap forward in knowledge and technology as long as Skynet doesn't kill us all first.
Bravo for china. The china government dump billions on Huawei and deep seek. All they get in return is BS and Lies. With this bans will force them to do real work not copy and paste
This should come as no surprise to Trump, especially because America, like China, are just as capable of including spyware on their chips. I'm not saying that they have, but I'd be surprised if they haven't as it would just be a sensible thing to do in countries who have a history of stealing Western tech.
