China intensifies AI competition as NVDA chip supply is restricted by Beijing, with Nvidia CEO Jensen Huang acknowledging the situation with a casual 'That's fine'.
In a significant development, the Cyberspace Administration of China (CAC) has imposed a ban on major tech companies from purchasing Nvidia's artificial intelligence (AI) chips. This decision comes as a response to Nvidia's RTX Pro 6000D chip, tailor-made for mainland buyers, which the CAC has instructed companies like ByteDance and Alibaba to discontinue testing.
The move by the CAC is part of a broader Chinese strategy in AI, according to Senior Market Strategist John Rowland, CMT. Rowland asserts that China's advancement in AI is not an attempt to level the playing field, but to win.
Meanwhile, Alibaba is actively investing in its own AI chips to reduce dependence on Nvidia's technology in China. The company is heavily investing in cloud and AI hardware infrastructure to fill the gap left by restricted access to Nvidia chips due to U.S. export controls and China's reluctance to purchase Nvidia's RTX6000D AI chips.
Alibaba, along with other Chinese tech giants like Baidu, is using domestically designed chips to train AI models, partly replacing Nvidia's chips amid escalating tech tensions between the U.S. and China. Notably, Alibaba (BABA) stock opened more than 2% higher in New York after landing a massive data center deal to provide AI chips to state-owned China Unicom.
In a separate development, Chinese researchers have published new research on SpikingBrain 1.0, an AI system based on spiking neural networks in the human brain. SpikingBrain 1.0 runs entirely on China's homegrown MetaX chip platform, not on Nvidia hardware. The system is reportedly up to 100 times faster than standard systems.
Nvidia's shares have been affected by these developments. They ended Tuesday beneath their 50-day moving average and are down more than 1% in early trading, extending a 5% drawdown from their post-earnings highs, set in mid-August.
Nvidia CEO Jensen Huang has stated that he is "disappointed," but will be "patient" as regulatory roadblocks are smoothed out. Huang has also advised financial analysts not to include China in their forecasts.
It is important to note that Nvidia itself has been accused of violating antimonopoly regulations following its Mellanox acquisition in 2020. Elizabeth H. Volk, on the date of publication, had a position in NVDA.
This article is for informational purposes only and readers should view the website's Disclosure Policy for more information. Jensen Huang is currently in the U.K. alongside other tech leaders for President Trump's state visit. China has been targeting domestic chipmakers for probes ahead of this week's trade talks in Madrid. Huang has said that "There are a lot of places we can't go to, and that's fine."
Read also:
- Goodyear in 2025: Advancement in Total Mobility through the Launch of Kmax Gen-3 by Goodyear
- Electric SUV Showdown: Vinfast VF6 or MG Windsor EV - Your Choice Revealed
- United States Secures $632 Million to Fuel Electric Vehicle Revolution
- IM Motors reveals extended-range powertrain akin to installing an internal combustion engine in a Tesla Model Y
