China has issued new guidance requiring all state-funded data centre projects to exclusively use domestically made artificial intelligence chips, two sources familiar with the matter told Reuters. Regulatory authorities in recent weeks instructed that any data centres less than 30% complete must remove installed foreign chips or cancel procurement plans, while more advanced projects will be assessed individually. The directive could represent one of China’s most sweeping efforts to remove foreign technology from its critical infrastructure and marks another front in the deepening technological rivalry between Beijing and Washington.
According to Reuters, the move comes after U.S. President Donald Trump said Washington would allow China to buy some Nvidia products “but not the most advanced” chips, following a recent meeting with Chinese President Xi Jinping. The decision is expected to severely impact Nvidia’s business in China, where the company’s market share in AI chips has already fallen from 95% in 2022 to nearly zero. Other foreign suppliers, including AMD and Intel, are also affected.
AI data centre projects in China have attracted over $100 billion in state funding since 2021, Reuters reported, with most facilities receiving some level of government support. It remains unclear whether the new directive applies nationwide or only to select provinces. Some projects have already been suspended as a result, including one in a northwestern province that had planned to use Nvidia chips.
By excluding U.S. technology, Beijing is creating new opportunities for domestic players such as Huawei, Cambricon, MetaX, Moore Threads, and Enflame. These firms have struggled to gain ground against Nvidia’s dominant ecosystem but now stand to benefit from the state’s push toward technological self-reliance. However, analysts warn that the ban could widen the technological gap between China and the U.S., as American companies like Microsoft, Meta, and OpenAI continue to invest hundreds of billions of dollars into data centres powered by Nvidia’s most advanced processors.
Reuters noted that the Cyberspace Administration of China and the National Development and Reform Commission did not respond to requests for comment, while Nvidia and AMD offered no statement. Intel declined to comment. The order adds to a series of measures aimed at reducing China’s reliance on U.S. technology, following similar actions such as the 2023 ban on Micron products in critical infrastructure and new restrictions on the use of American-made chips in sensitive government projects.
