Beijing increases attempts to compete with the US and increase semiconductor independence.
China’s internet regulator has prohibited the country’s major technology businesses from purchasing Nvidia’s artificial intelligence processors, as Beijing ramps up efforts to strengthen its local sector and compete with the US.
Chinese Regulator Halts Nvidia
According to three people with knowledge of the situation, the Cyberspace Administration of China (CAC) ordered businesses, including ByteDance and Alibaba, to stop testing and placing orders for Nvidia‘s specially designed RTX Pro 6000D this week.
In Wednesday’s morning trade, Nvidia‘s stock dropped 2.7%.
Several firms had indicated they would purchase tens of thousands of the RTX Pro 6000D, and had begun testing and verification work with Nvidia’s server vendors, the individuals added.
China Expands Chip Restrictions
According to the people, the companies instructed their suppliers to halt their work after receiving the CAC order.
The prohibition goes beyond previous regulatory instructions that focused on Nvidia‘s other China-only chip, the H20, which is commonly used for AI. It follows the conclusion by Chinese authorities that indigenous chips now perform on par with Nvidia‘s models used in China.
Nvidia CEO Jensen Huang told reporters in London on Wednesday that he anticipated speaking with US President Donald Trump that evening during the US president’s state visit to the UK about the company’s capacity to do business in China.
I’m upset with what I see. However, I recognize that they have bigger goals to resolve between the US and China. Regarding it, we are patient.
Beijing Pushes Semiconductor Independence
In order to compete with the US in the AI race, Beijing is pressuring Chinese tech companies to strengthen their domestic semiconductor industry and reduce their reliance on Nvidia.
An official at one of the tech businesses said, “The message is now loud and clear.” In the past, many hoped that if the geopolitical situation improved, Nvidia would provide more. Now, everyone is working together to construct the domestic system.
In an attempt to limit Beijing’s advancements in artificial intelligence, former US President Joe Biden prohibited Nvidia from selling its most potent products to China. As a result, the business began manufacturing chips specifically for the Chinese market.
China’s AI Chips Advance
According to one person with knowledge of the situation, Beijing’s regulators recently called on domestic chipmakers like Huawei and Cambricon, as well as Alibaba and search engine behemoth Baidu, which also produce their own semiconductors, to report how their products stack up against Nvidia‘s China chips.
The person added that they came to the conclusion that China’s AI processors had advanced to a level that was on par with or better than the Nvidia products that were permitted under export restrictions.
The Financial Times reported last month that China’s chipmakers were attempting to treble the country’s overall production of AI chips next year.
Domestic Supply Meets Demand
According to an industry insider, “there will be enough domestic supply to meet demand without having to buy Nvidia chips,” according to the top-level consensus at the moment.
Nvidia launched the RTX Pro 6000D in July during Huang’s visit to Beijing, when the US firm also stated Washington was relaxing its prior restriction on the H20 chip.
China Curbs Nvidia Sales
According to the FT last month, China’s authorities, notably the CAC, have cautioned tech businesses against purchasing Nvidia‘s H20 and asked them to provide evidence for their decision to forego homegrown goods.
The final device Nvidia was permitted to sell in large quantities in China was the RTX Pro 6000D, which the firm claims may be used in automated production.
The CAC, Nvidia, ByteDance, and Alibaba did not immediately reply to requests for comment.