China’s Internet Regulator Bans America’s Nvidia Chips
Sept. 20—China’s internet regulator, the Cyberspace Administration of China (CAC), has banned the country’s biggest technology companies from buying the Santa Clara, California-based Nvidia’s artificial intelligence chips, as Beijing increases efforts to boost its domestic industry.
Earlier this week, the CAC told large Chinese companies, such as ByteDance and Alibaba, to end their testing and orders of the RTX Pro 6000D, a chip that Nvidia tailor-made for China. Several Chinese companies that had ordered tens of thousands of the Nvidia chips told their suppliers to stop the work, according to a Financial Times report.
Two processes are at work. First, Beijing is putting pressure on Chinese tech companies to boost the country’s homegrown semiconductor industry and break reliance on Nvidia. “The message is now loud and clear,” said an executive at one of the Chinese tech companies, reports FT. “Earlier, people had hopes of renewed Nvidia supply if the geopolitical situation improves. Now it’s all hands-on deck to build the domestic system.”
Many Chinese semiconductor makers believe that their chips are as good as or superior to Nvidia’s and other American companies.
The second process is that the Biden administration announced Dec. 2, 2024 U.S. government restrictions that prohibited the sales of certain types of chips and chip-making machinery to China and added more than 100 Chinese companies to a restricted American trade list. This was supposed to cut China off from the world’s most advanced technologies and impede its ability to compete with U.S. chipmakers. In reality, however, the U.S. attempt caused China to make major internal strides in chip-making.
Nvidia CEO Jensen Huang, however, is desperate to sell to the lucrative and very large Chinese market. On July 16 of this year, Huang delivered part of his speech in Mandarin to the Third China International Supply Chain Expo held in Beijing, to try to persuade the Chinese to look favorably upon Nvidia products.
It is expected that these issues will be dealt with in what some are already calling "the Great Big Deal" that Chinese President Xi Jinping will offer President Trump in series of upcoming summits. The Chinese action is a correct use of protection of a nascent domestic industry from a dominating market influence. But that can also be accomplished through the kind of trade deal that Xi and Trump will negotiation.
Meanwhile, while in Britain, Trump signed a deal with Prime Minister Sir Keir Starmer to cooperate with the United Kingdom and such matters involving advanced chip and AI technology. With Huang and other corporate leaders present at the signing, Trump professed to have "no idea" about what they were really up to and what all this was about. He told Treasury Secretary Scott Bessent, that he had no way of knowing if this was a "good deal" that he was signing, and only half-jokingly said that, if it isn't, "I hold you [Bessent] and you [looking at Huang} responsible."