Beijing has quietly issued new guidance barring state-funded data centres from using foreign-made artificial intelligence (AI) chips, according to sources cited by Reuters. The move is part of China’s broader strategy to achieve self-sufficiency in critical technologies and reduce reliance on U.S. semiconductor firms such as Nvidia, AMD, and Intel. Projects less than 30% complete have reportedly been ordered to remove or replace foreign chips, while others will be reviewed individually.
This directive follows years of escalating tech tensions between the U.S. and China. Washington has imposed export controls restricting China’s access to high-end chips, citing national security concerns, while Beijing has retaliated by accelerating investment in domestic semiconductor industries.
Why It Matters
The ban marks one of China’s strongest steps yet toward technological decoupling. By excluding foreign chipmakers from state-backed projects, Beijing is signaling its determination to insulate key infrastructure from Western pressure. It could significantly disrupt global chip trade and further fragment the AI supply chain.
For Nvidia, which once dominated China’s AI chip market with a 95% share in 2022, this could be a major blow. The company’s market share in China has already dropped to zero, and this new guidance could erase any hope of recovery. Meanwhile, domestic firms like Huawei, Cambricon, and Enflame stand to gain but the policy could also slow China’s progress in high-end AI computing, where U.S. companies still lead.
The Cyberspace Administration of China and the National Development and Reform Commission have not publicly commented on the new rules. U.S. chipmakers Nvidia, AMD, and Intel either declined or did not respond to requests for comment. However, the implications are clear: China is closing its doors to foreign hardware, while U.S. tech firms may face mounting pressure to seek alternative markets.
Within China, the policy is seen as a patriotic and strategic move to strengthen national resilience. Some local projects, including a major AI facility in a northwestern province, have already been halted pending compliance with the new guidelines.
What’s Next
Analysts expect Beijing to expand similar localization rules across other sectors of digital infrastructure, deepening the technological divide between China and the West. As both Washington and Beijing double down on chip sovereignty, the global AI race may increasingly split into two distinct ecosystems each advancing under different standards, technologies, and political priorities.
With information from an exclusive Reuters report.
