China’s internet regulator, the Cyberspace Administration of China (CAC), has ordered leading tech companies such as ByteDance and Alibaba to stop buying and testing Nvidia’s AI chips, specifically targeting the RTX Pro 6000D, a model tailor-made for the Chinese market. This directive also includes cancelling existing orders.
This ban follows earlier restrictions that China imposed around the H20 chip, another Nvidia product widely used in local AI workloads.
Why It Matters
- Push for Self-Reliance: The move aligns with China’s broader strategy to reduce dependence on U.S. technology and build up its own AI chip industry. Domestic chipmakers have reportedly achieved performance levels now seen as competitive with certain Nvidia models.
- Regulatory Pressure: In addition to export restrictions imposed by the U.S., China is now using its regulatory muscle to also restrict access from the inside. This double-layer of pressure could accelerate domestic chip development and adoption.
- Impact on Nvidia: Nvidia’s CEO Jensen Huang expressed disappointment with the directive. The ban threatens the company’s revenues in a key market and could force renegotiation of its strategies for China.
Risks & Uncertainties
- Scope & Enforcement: It’s not entirely clear how comprehensive this ban is. How strictly the CAC enforces it, especially among smaller firms or indirect supply channels, remains to be seen.
- Existing Contracts / Stock: Some companies may have existing stock or already-approved orders; winding those down or cancelling unfulfilled orders could lead to legal or financial complications.
- Domestic Alternatives’ Performance: While China claims that its homegrown chips are now competitive for certain applications, matching Nvidia’s top-tier chips across all AI workloads is a high bar. Performance, software support, supply chain maturity, and energy efficiency will be under scrutiny. Reuters
What to Watch
- Which specific companies besides ByteDance and Alibaba are affected, and how they respond (e.g., cancelling orders, shifting to local options).
- Whether Chinese regulators impose penalties for non-compliance or silently allow some firms to circumvent restrictions.
- Innovations or deals from domestic chipmakers trying to fill the void—this could be a tipping point for local AI chip ecosystem.
- Nvidia’s financial disclosures in coming quarters to see how much Chinese demand contributes to its bottom line, and how this ban impacts its projections.
