Chinese authorities have issued new policy guidance that mandates data center projects that received state funding to avoid foreign-made artificial intelligence chips, according to Reuters.
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This development puts the spotlight on several U.S. chip makers, including Nvidia (NVDA), Advanced Micro Devices (AMD), and Intel (INTC), which consider China, the world’s second-largest economy, as a critical export market.
According to the outlet, such projects that are less than 30% complete will have to take out any non-domestic chips already installed or scrap plans to buy them. In cases where such projects have gone far beyond this threshold, each project is to be considered individually, sources told the outlet.
U.S.-China AI Chip Tensions Brew
The development comes several days after the U.S. and China eased trade tensions following their recent disagreement over trade tariffs. However, it also trails the recent tussle between the two advanced economies over dominance in AI chips and high-performance computing — a sector expected to redefine the global economy.
President Donald Trump, in an interview aired on Sunday, noted that Blackwell chips, Nvidia’s most advanced AI chips, are not for export to other countries, hinting at a possible export ban. Already, Nvidia is only permitted to sell its H20 chips to Chinese manufacturers.
Furthermore, senior government officials in the Trump administration have warned that allowing Nvidia to export its most advanced microchips and processors to China could threaten national security by boosting China’s AI capabilities, particularly in defense.
China Is ‘Too Vital to Cut Off’
Nvidia has been preparing new chip products for the Chinese market, where its presence has collapsed dramatically due to U.S. export controls. The American chip designer’s chief executive, Jensen Huang, this week noted that China is “too vital to cut off,” emphasizing that an open technology trade benefits both countries.
The guidance update from China comes as the Asian powerhouse seeks to wean itself off dependence on American technology. Authorities in the country recently warned local companies against using Nvidia’s H20 chips due to security concerns.
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