China Just Banned U.S. AI Chips

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So this is big.

According to a Reuters exclusive, China quietly told every state-funded data center to stop using foreign-made AI chips. That means no NVIDIA, no AMD, and no Intel in new projects.

The rule is simple: if a data center has received any government money, it must use domestically produced chips only.
If construction is still early (under 30% done), the chips have to be ripped out or the project paused. If it’s nearly finished, it’ll be reviewed case by case.

What’s happening

• China has invested over $100 billion in AI data centers since 2021. Almost all of them have some level of state funding.

• The new order hits NVIDIA the hardest. They once owned 95% of China’s AI chip market. That number is now zero.

• Local chipmakers like Huawei, Cambricon, and MetaX are expected to fill the gap.

• The directive covers NVIDIA’s H20 chips, the most advanced model the U.S. still allows for China, plus the even stronger B200 and H200 chips found in grey markets.

Why this matters

This isn’t just about chips. It’s about control.

China wants complete tech independence, and cutting U.S. hardware from state infrastructure is a massive step toward that.
For NVIDIA and other U.S. chipmakers, it’s a huge blow. For Chinese chip startups, it’s a once-in-a-lifetime opening.

But there’s a tradeoff.
Domestic chips still trail behind in software support and performance. That means China might protect its supply chain at the cost of short-term AI power.

The bigger picture

Both countries are in an AI arms race.
The U.S. is considering federally backed AI infrastructure loans, while China is doubling down on homegrown silicon.
It’s becoming clear that the future of AI won’t be one unified ecosystem. It’ll be two — one powered by U.S. tech and another built inside China’s walls.

Catch you tomorrow.

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