Beijing, China – November 5, 2025 — The Chinese government has taken a decisive step toward technological self-reliance by issuing new guidance that effectively prohibits the use of foreign-made artificial intelligence (AI) chips in any state-funded data-centre project. According to multiple sources within the industry, new data-centres that receive state funds must now rely exclusively on domestically produced AI hardware—foreign suppliers will be phased out entirely or barred from new deployment.
Strategic Shift: From Import to Indigenous
Under the new directive, data centres that are less than 30% complete and have already been awarded state funding must cease using foreign AI chips, remove any such installed hardware, or cancel purchases altogether. The order also covers facilities deeper into construction, with regulatory approval now required on a case-by-case basis for any foreign-chip usage.
This policy marks one of the most aggressive moves by Beijing yet to purge foreign technology from its major infrastructure segments, particularly where AI and compute power play pivotal roles. The action comes amid a broader agenda to cultivate national champions and reduce dependence on U.S. firms such as Nvidia, AMD and Intel.
Market Winners and Losers
For U.S. and Western-based chip vendors, the policy signals a sharp contraction of opportunity: Nvidia, which previously held dominant share in China’s AI-chip market, could see its revenue potential evaporate. A source familiar with the matter explained that the guidance specifically targets Nvidia’s H20-class chips and other advanced processors, including the B200 and H200 models.
On the flip side, domestic players such as Huawei Technologies, Cambricon, and smaller-scale firms like MetalX, Moore Threads and Enflame may gain significantly—both in sales volume and investment prioritisation. However, these firms still face supply-chain constraints, particularly for advanced manufacturing equipment barred by U.S. sanctions.
Geopolitical and Industry Implications
From a geopolitical standpoint, this move further intensifies the U.S.–China tech decoupling. Washington has long used export controls to curb China’s access to high-end AI hardware, citing national-security concerns. Beijing’s new ban can be seen as a counter-move aimed at domestically anchoring its AI ecosystem and insulating it from external dependencies.
For multinational tech companies, the message is clear: China’s market is becoming increasingly compartmentalised. Firms must navigate escalating regulatory complexity, shifting procurement norms and bifurcating technology ecosystems—potentially redefining global supply-chain strategies for AI infrastructure.
Strategic Takeaways for Investors and Corporates
For the Ixoraly audience of strategy teams, investors and tech-industry leaders, several key implications arise:
- Re-evaluate market exposure: Companies with significant China revenue tied to AI-hardware sales need to assess the probability of disruption, loss of market access or forced reallocation.
- Supply-chain diversification: Firms must consider dual-sourcing strategies, increased local content compliance and alternative export markets to offset risks tied to Chinese policy shifts.
- Domestic-market ramp-up: Chinese AI-chip firms should be evaluated not only for revenue growth but also for strategic importance, as Beijing’s funding and procurement priorities may favour them heavily.
- Regulatory forecasting: Given China’s broad definition of “state-funded” projects, even non-directly funded entities may face indirect pressure or eligibility restrictions for foreign components.
- Technology-ecosystem bifurcation: The software and hardware layers of AI ecosystems may fragment along national-tech-stack lines—leading to divergent platform investments and developer lock-in in China vs. the West.
Looking Ahead: Key Monitoring Points
Several developments warrant close attention in the coming months:
- Whether China extends the ban beyond state-funded projects to cover commercial or private-sector data centres.
- The pace at which domestic AI-chip production scales to fill the void left by foreign firms, including any dependency on foreign manufacturing tools.
- Responses from global chip-makers—whether they pursue bypass strategies, local joint ventures or exit China altogether.
- Potential retaliatory measures from the U.S. or adjustments in export-control policy in response to China’s offensive.
- Investor behaviour in China’s AI-hardware sector, including capital-markets valuation, deal flow and state-backed incentives.
About Ixoraly
Ixoraly is a global business-intelligence platform providing real-time market insights, strategic commentary and cross-sector analysis. We support executives, investors and analysts in navigating complex intersections of technology policy, supply-chain strategy and geopolitical risk.
