Nvidia slumps on report of wide-ranging ban on chip sales by Chinese regulators

Here’s the latest sign that China is actively pursuing an Nvidia-less AI boom that puts its domestic capabilities to the test:

The Financial Times is reporting that China’s internet regulator has banned the country’s technology leaders, like Alibaba and ByteDance, from buying Nvidia’s AI chips. Shares of the $4 trillion chip designer moved lower in premarket trading on this news, as did Advanced Micro Devices.

Per the FT, this directive “comes after Chinese regulators concluded that domestic chips had attained performance comparable to those of Nvidia’s models used in China.”

The report indicates that in the wake of this decision, companies that had orders in progress for the RTX Pro 6000D — chips that Nvidia CEO Jensen Huang has said are ideal for smart factories and logistics — have told their suppliers to stop testing and verification work.

In a press briefing on Wednesday, Huang responded to the report by saying he was “disappointed,” while adding, “They have larger agendas to work out between China and the United States, and I’m understanding of that.”

Separately, in news that seemingly underscores China’s burgeoning AI aptitude, Alibaba is up 2% in early trading after Chinese state media indicated that it had booked a deal with the country’s second-largest wireless carrier to supply AI chips for a new data center.

In mid-August, The Information initially reported that China’s internet regulator “ordered local tech companies including ByteDance, Alibaba Group, and Tencent Holdings to suspend their purchases of Nvidia chips, citing data security concerns.” The outlet followed that up with more coverage showing that the chip designer had told two suppliers that put the finishing touches on its H20 processors (nerfed chips tailor-made for the Chinese market that were previously subject to export controls) to suspend production work.

This continued campaign to squeeze Nvidia out of its domestic market comes just as China and the US have seemingly resolved one of their other major outstanding issues in the tech space, with the framework of an agreement for a US spin-off of (ByteDance-owned) TikTok in place ahead of a scheduled call between US President Donald Trump and Chinese President Xi Jinping on Friday. Earlier this week, China’s State Administration for Market Regulation ruled that Nvidia violated antitrust laws relating to the terms of a 2020 acquisition.

Getting locked out of China’s AI data center market in light of US export controls was a major headache for Nvidia earlier this year, fueling a $4.5 billion impairment charge in its Q1 earnings report and eliciting a whopping 27 references to China during its analyst call, more than the previous four quarterly conference calls combined.

Jensen Huang may have successfully convinced President Trump that “the platform that wins AI developers wins AI” — and promising to send 15% of revenues from H20 sales if export curbs were lifted certainly didn’t hurt his case. But that argument seems to have struck a chord with China’s leadership, too.