China tells its tech companies to stop buying all of Nvidia’s AI chips

China’s internet regulator has told the country’s biggest technology companies to stop buying all of Nvidia’s artificial intelligence chips and terminate their existing orders, as Beijing steps up efforts to boost its homegrown semiconductor industry and compete with the US.

The Cyberspace Administration of China (CAC) informed companies including ByteDance and Alibaba this week to terminate their testing and orders of the RTX Pro 6000D, Nvidia’s tailor-made product for the country introduced two months ago, according to three people with knowledge of the matter.

Several companies had indicated they would order tens of thousands of the RTX Pro 6000D, and had started testing and verification work with Nvidia’s server suppliers before telling them to stop the work after receiving the CAC order, said the people.

The ban is stronger than earlier guidance from regulators that focused on the H20, Nvidia’s other China-only chip widely used for AI. Beijing is putting pressure on Chinese tech companies to break their reliance on Nvidia in order to achieve an independent semiconductor supply chain so it can compete in an AI race against the US.

“The message is now loud and clear,” said an executive at one of the tech companies. “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.”

Nvidia started producing chips tailored for the Chinese market after the US government of then president Joe Biden banned the company from exporting its most powerful products to China, hoping to rein in Beijing’s progress on artificial intelligence.

Beijing’s regulators have recently summoned domestic chipmakers such as Huawei and Cambricon, as well as Alibaba and search engine giant Baidu, which make their own semiconductors, to report how their products compare against Nvidia’s China chips, according to one of the people with knowledge of the matter.

They have concluded that China’s AI processors have reached a level comparable to or exceeding that of the Nvidia products allowed under export controls, the person added.

The Financial Times reported last month that China’s chipmakers were seeking to triple the country’s total output of AI processors next year.

“The top-level consensus now is there’s going to be enough domestic supply to meet demand without having to buy Nvidia chips,” said an industry insider.

Nvidia introduced the RTX Pro 6000D in July during chief executive Jensen Huang’s visit to Beijing, when the US company also said Washington was easing its previous ban on the H20 chip.

China’s regulators, including the CAC, have warned tech companies against buying Nvidia’s H20, asking them to justify having purchased them over domestic products, the FT reported last month.

The RTX Pro 6000D, which the company has said could be used in automated manufacturing, was the last product Nvidia was allowed to sell in China in significant volumes.

Alibaba, ByteDance, the CAC and Nvidia did not immediately respond to requests for comment.

Additional reporting by Eleanor Olcott in Zhengzhou