Reducing reliance on imported tech: China bans foreign AI chips from state-funded data centres

Though there seems to be a thaw in the relations between the two superpowers, following a meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea, Beijing’s move appears to be aimed at prolonging the effects of export restrictions placed by the White House earlier.

Washington has been cautious about exports of American high-end AI chips on grounds of its potential uses in the Chinese military, but as part of its concessions following the high-level meeting in Busan, the White House suspended new Entity List restrictions for a year, which had made it difficult for Chinese firms to acquire off-limits US hardware.

Beijing’s domestic push

Beijing’s directive, however, appears to be aimed at prolonging the effects of the curb whilst providing greater access to domestic AI chipmakers.

Since 2023, Beijing has been tightening restrictions to eliminate foreign tech in critical infrastructure. The policies have allowed Chinese manufacturers like Huawei gain access to a greater share in the data centre-driven market for AI chips in China, helping them grow and make China less reliant on US hardware, an outcome American premier chipmaker Nvidia’s CEO, Jensen Huang, warned about.

On the sidelines of the Financial Times’ Future of AI Summit, Huang said “China is going to win the AI race” owing to its cheaper energy costs and fewer regulations, and “cynicism” in the West.

New Wall of China

Nvidia’s current share of the AI chip market in China is currently zero, compared to 95 per cent in 2022, Reuters reported. The firms that are most likely to benefit from the galvanised policy trend are Huawei, Cambricon Technologies, Biren Technology and Alibaba.

The bout began in 2023 with the ban on American chip manufacturer Micron in critical infrastructure, with China striving for tech self-reliance amid Washington’s curbs on AI chip exports. Last month, the firm announced plans to stop supplying server chips to data centres in the Chinese mainland altogether.

On Friday, to keep its rival in check, the White House banned Nvidia from selling its latest scaled-down AI chips, the B30A, to China, which can be used for training large language models, The Information reported.

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