Chinese tech giants now need to purchase equal amounts of domestic and foreign-made artificial intelligence chips for their new data centers. However, the implementation of this directive is not strict and it remains unclear whether any sanctions will be imposed on non-compliant companies.

Representatives of China’s National Development and Reform Commission and the Ministry of Industry and Information Technology, as well as the aforementioned technology giants, did not comment on the new directive as they did not respond to The Information’s questions at all. Nvidia also declined to comment on the report.

This move by the Chinese government poses a significant challenge for Nvidia, which is trying to develop special offers for the Chinese market.

In response to US sanctions, Nvidia is working on three new GPUs for China:

This was reported by the Reuters agency in January, citing information from two people familiar with the matter.

• China is a critical market and an important source of revenue for Nvidia. It fell into this country in fiscal year 2023 19 percent of Nvidia’s revenue comes from chip sales for data centers.
• In February, Nvidia CFO Colette Kress told investors that U.S. export restrictions China’s share of company’s revenue falls to “mid-single-digit percentage”.

If China can’t buy from the US, it will build itself. Therefore, the United States should be careful. China is a very important market for the technology sector.
Nvidia CEO Jensen Huang said in an interview with the Financial Times in May 2023.

Meanwhile, Nvidia’s efforts to develop chips specifically for China may also be disrupted due to these new bans. Jensen Huang emphasized that there is no backup plan in case the company loses the Chinese market.