China bans foreign AI chips from state-funded data centres

China has instructed state-funded data centre projects to use only domestically produced AI chips, signaling a significant push to reduce dependence on foreign technology and boost its homegrown semiconductor industry. According to sources familiar with the matter, projects that are less than 30% complete have been told to remove any foreign chips already installed or cancel planned purchases, while more advanced projects will be reviewed individually. The directive reflects Beijing’s broader effort to increase self-sufficiency in AI hardware and limit reliance on imported technology.

The move could heavily affect foreign AI chipmakers such as Nvidia, AMD, and Intel, restricting their access to one of the world’s largest technology markets. For domestic firms, including Huawei Technologies and Cambricon Technologies, the policy presents an opportunity to expand sales and strengthen their position in China’s AI sector. However, Chinese companies still face challenges in scaling production due to supply-chain limitations, especially for advanced manufacturing equipment controlled by US export restrictions.

Since 2021, state-funded AI data-centre projects in China have received over USD 100 billion in investment, with most large-scale facilities relying on government backing. Sources did not specify whether the new rule applies nationwide or only in select provinces, leaving some uncertainty about its scope. The policy deepens the ongoing technology decoupling between the US and China, particularly in high-end computing, and may accelerate adoption of domestic AI chips if local manufacturers can meet demand and maintain competitive software ecosystems.