China clamps down on Nvidia chip sales to fuel homegrown AI industry

• Chinese regulators acknowledge that their own AI chips now match or even outperform Nvidia’s export-restricted offerings.

China’s main internet regulator has just delivered a major shock to the world of artificial intelligence: the country’s biggest tech players, including ByteDance and Alibaba, have been ordered to stop buying and testing Nvidia’s AI chips.

Specifically targeted is the RTX Pro 6000D, a chip specially designed for China, which had been generating considerable buzz among local companies eager for advanced AI power.

A swift and decisive policy shift

The Cyberspace Administration of China (CAC) has reportedly told tech giants this week to put an immediate halt to verification and purchase of the RTX Pro 6000D. The move comes just as several companies were ramping up their orders, some looking to buy tens of thousands of units. But, as soon as the directive landed, suppliers were told to cease all related efforts.

Reaching further than earlier guidance—previously focused on Nvidia’s H20 chip—this outright ban marks an escalation. The context? Chinese regulators have concluded that their own AI chips now match or even outperform Nvidia’s export-restricted offerings. It’s a bold statement: China is telling its homegrown tech industry it’s time to break free of reliance on foreign AI hardware.

Wednesday’s news didn’t go unnoticed by the markets. Nvidia’s shares fell about three per cent after word spread about China’s clampdown. Jensen Huang, Nvidia’s CEO, was in London at the time and publicly acknowledged the setback, expressing disappointment but also a willingness to respect each government’s decision.

“We can only be in service of a market if the country wants us to be,” he reflected, recognising the broader US-China tensions at play.

Beijing’s big bet on domestic tech

It’s clear Beijing is making an all-in bet on developing its own semiconductor industry—especially in the realm of AI, where the stakes are enormous in the ongoing US-China tech rivalry.

The regulator’s decision is seen as a loud signal to Chinese tech companies: domestic innovation is now the top priority, with no more waiting for a possible relaxation of US restrictions on Nvidia.

Insiders say that where there once was hope for renewed Nvidia supply—should geopolitics improve—the mood has shifted to urgent, coordinated action to build and scale up China’s own AI ecosystem with native chips.

Chinese alternatives

The ban didn’t come out of thin air. After the US administration barred Nvidia from selling its most powerful products to China, the company scrambled to develop chips—like the now-banned Pro 6000D and H20—tailored for the Chinese market.

But even as Nvidia hustled, Chinese regulators and chipmakers, including Huawei and Cambricon, have been racing to catch up. In fact, Beijing recently convened domestic manufacturers to directly compare their chips’ performance against Nvidia’s export-compliant models.

The results, according to sources familiar with these meetings, suggest that Chinese AI processors have achieved, and in some cases exceeded, the capabilities of Nvidia’s restricted chips. This achievement underpins the government’s new hard line against further Nvidia sales in China. Industry voices point out that, with domestic output set to triple next year, China now believes it can satisfy demand internally.

The RTX Pro 6000D was launched with fanfare just this July during a visit from Nvidia’s CEO. It represented the last major Nvidia product allowed into the country after tightening US restrictions.

As of now, with the new ban enforced and domestic supply ambitions running high, Chinese tech companies are being pushed into a new era—one in which they build, test, and deploy homegrown AI chips at scale, and the world watches closely to see if China’s bet will pay off.