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China has ordered data centres that receive state funding to use only domestically produced artificial intelligence chips, according to two people familiar with the directive, a move that marks one of Beijing's strongest pushes yet to remove foreign technology from critical infrastructure.
The guidance, issued in recent weeks, requires data centre projects less than 30% complete to remove or cancel orders for foreign-made chips. Facilities already under construction will be assessed individually, the sources said.
The order is expected to hit U.S. chipmakers Nvidia, AMD, and Intel hardest, as Beijing accelerates efforts to achieve self-reliance in high-end computing. It also comes amid a fragile pause in trade tensions between Washington and Beijing.
China's regulators have not publicly identified which agencies issued the notice, but the Cyberspace Administration of China and the National Development and Reform Commission are believed to be involved. None of the agencies, nor the affected companies, responded to requests for comment.
The directive could derail Nvidia's efforts to regain market share in China, which has plummeted from 95% in 2022 to zero this year, company data show. Nvidia's H20 chip, the most advanced model still permitted for export to China, will now be excluded from any new state-backed data centre projects.
Some developments, including a major facility in a northwestern province, have already been suspended after plans to install Nvidia chips were scrapped.
Beijing's move follows years of escalating U.S. export restrictions, which Washington says are necessary to prevent China's military from acquiring advanced computing capabilities. In response, Chinese officials have sought to nurture local alternatives, including Huawei Technologies, Cambricon, MetaX, and Enflame.
While the order is expected to boost domestic chipmakers, analysts warn it could deepen the technological gap between China and the United States. American firms such as Microsoft, Meta, and OpenAI are investing heavily in data centres powered by Nvidia's most advanced processors, chips that remain off-limits to Chinese manufacturers due to U.S. sanctions.
Still, Beijing appears determined to press ahead. "We are carving our own path in AI development," one official involved in the directive said. "Dependence is no longer an option."
