China tells companies to stop buying Nvidia’s repurposed AI chip

Hong Kong - China’s cyberspace regulator has instructed companies including Alibaba Group Holding to halt orders for Nvidia’s RTX Pro 6000D, a semiconductor for workstations that can be repurposed for artificial intelligence applications.

The Cyberspace Administration of China told companies this week to stop testing the chip and cancel existing orders, according to people familiar with the matter.

Several companies had indicated before the directive that they would buy tens of thousands of the semiconductors, which Nvidia designed to avoid triggering US restrictions on sales of advanced AI chips to China, according to a Sept 17 report in the Financial Times.

Nvidia shares slid 2.7 per cent in US trading on Sept 17, while the stock of rival Advanced Micro Devices fell nearly 1 per cent.

The move marks Beijing’s latest step to wean the country off Nvidia hardware and boost domestic alternatives – all while China also protests US export curbs that have effectively barred its firms from buying the best foreign chips and manufacturing gear.

Those restrictions, which cover a range of products beyond Nvidia’s processors, have been a central theme of ongoing trade talks between Washington and Beijing. 

The White House, which is preparing for a Sept 18 call between US President Donald Trump and Chinese President Xi Jinping, had no comment on China’s Nvidia move.

Talks between the two leaders are already expected to touch on a range of contentious issues, including a new deal to keep TikTok running in the US. 

Nvidia chief executive Jensen Huang, meanwhile, expressed chagrin at the RTX Pro 6000D restrictions.

“I’m disappointed with what I see, but they have larger agendas to work out between China and the United States,” Mr Huang told reporters at a press briefing in Britain, where he is accompanying Mr Trump on a state visit. “We can be in service of a market only if the country wants us to be.”

Nvidia dominates the market for the chips essential to building and operating AI services at companies like OpenAI and Meta Platforms, and Chinese firms still covet its hardware despite progress on domestic alternatives.

The chipmaker has pressed the Trump administration for relief from export controls that have hampered its ability to sell to customers in the Asian country. 

Those restrictions, which date back to 2022, were designed to prevent China from accessing advanced AI that could lend Beijing a military edge.

Washington has several times tightened the controls, prompting Nvidia to design new chips for China that abide by US thresholds.

That includes the RTX Pro 6000D, part of a product series that is not regarded as among Nvidia’s marquee offerings.

The chip is meant for workstations that can handle graphic design or product development, but it can be repurposed for use in AI data centres, with some compromises in performance. 

There is also a server version of the RTX Pro 6000D meant for deployment in smaller corporate data rooms, not the massive arrays that the other more powerful versions of the Blackwell chip are designed for.

While neither market is a huge source of income for Nvidia, Beijing’s action narrows the options for Chinese customers even further.

Nvidia also offers Chinese customers a chip specifically designed to handle AI workloads: the H20.

That accelerator, which debuted in 2024, is less powerful than Nvidia’s top AI processors – but it is particularly well suited for AI inference, the stage at which models recognise patterns and draw conclusions.

Trump officials restricted H20 sales to China in April, only to later approve licences to sell those processors – in exchange for a 15 per cent cut of the revenue.

But no sooner did Nvidia get Washington back on board than Beijing voiced its opposition.

The Chinese authorities have discouraged companies from using the H20 chip, guidance that stops short of an outright ban but has nonetheless had a chilling effect.

Nvidia, despite having got Washington’s official green light for some H20 exports, has not executed those shipments, the company said last week.

Nvidia’s Chinese customers want to make sure the “China government is also very well received in terms of receiving the H20 to them”, chief financial officer Colette Kress said at a Goldman Sachs conference. “But we do believe there is a strong possibility that this will occur.” 

Still, Beijing has continued to take an assertive tack.

This week, China ruled that Nvidia violated anti-monopoly laws with the US$7 billion (S$8.9 billion) acquisition of Mellanox Technologies in 2020, ratcheting up the pressure on US companies.

Days before that, Beijing also said it was launching an anti-dumping investigation targeting a type of semiconductor made by US companies such as Texas Instruments. 

“China clearly prefers to develop AI at its own pace on a domestic tech stack. Better to bite the bullet now than to rely on US tech that can be restricted upon a whim,” said Union Bancaire Privee managing director Ling Vey-Sern.

But while Beijing’s latest move is a show of confidence in local supply chains, he added, it’s also “still likely it’s a bargaining chip in the trade negotiations”.

Beijing’s regulators made their most recent decision because of a growing feeling that domestic chips have gained in sophistication, the Financial Times reported.

Huawei Technologies has led the development of AI chips for the domestic market, while upstarts such as Cambricon Technologies have also made progress.

Companies like Alibaba and Baidu, keen to reduce their reliance on foreign chips, are developing their own home-grown alternatives.

Alibaba has secured a high-profile customer in China’s No. 2 wireless carrier for its “T-Head” AI chips, suggesting the Chinese tech leader’s nascent semiconductor efforts are gaining traction in its home market. BLOOMBERG