China Bans Tech Firms from Buying Nvidia Chips

China’s Cyberspace Administration has ordered major tech giants to immediately halt all purchases of Nvidia’s AI chips.

The directive, aimed at companies from ByteDance to Alibaba, sent Nvidia stock falling nearly 1.5% in pre-market trading.

Jensen Huang, CEO of Nvidia, is “disappointed” in the decision.

He told BBC News the US needs “to make sure that people can access this technology from all over the world, including China.”

Huang added: “The advance of human society is not a zero-sum game.”

The ban that blindsided Silicon Valley

Beijing’s order is targeting Nvidia’s RTX Pro 6000D and H20 chips, both designed specifically for the Chinese market. Major Chinese tech companies including ByteDance and Alibaba were ordered to stop testing and purchasing these crucial AI components immediately.

The timing adds a twist. Nvidia CEO Jensen Huang expressed his disappointment about the ban while accompanying President Trump on his UK state visit this week. The irony could not be starker, Trump had reversed previous chip bans to China in July, only for China to turn around and reject the chips two months later.

Chinese firms saw the storm clouds gathering. Five months ago, they stockpiled around one million H20 chips worth approximately $12 billion, a hedge against exactly this moment.

China’s plan to crush US tech dominance

This was not a spur-of-the-moment call. Regulators framed the move by saying domestic chips have achieved performance levels comparable to Nvidia’s models used in China, a signal of confidence in homegrown silicon.

The groundwork has been visible all year. In January, Beijing announced an $8.4 billion AI investment fund, a clear bid to wean off American tech. Companies like Huawei are showcasing systems with 384 Ascend chips that analysts claim outperform Nvidia’s top-tier systems on specific metrics.

Momentum has only picked up. Alibaba has developed a new, domestically manufactured AI chip. Beijing-based Cambricon Technologies posted $247 million in quarterly revenue from its own processors. And Chinese startup DeepSeek unveiled V3.1 with features optimized for Chinese-made processors. One drumbeat, getting louder.

The fallout

This is more than a trade scuffle, it signals a major shift that threatens Nvidia’s grip on AI computing. The company controls an estimated 80% to 92% of the AI accelerator market. If China slams the door, the ripple effects will not be subtle.

Supply chains are already twitchy. If the Chinese market is cut off, Nvidia may need to divert chips elsewhere at a slower pace, creating global supply mismatches that drive up GPU prices. That pressures cloud heavyweights like AWS, Microsoft Azure, and Google Cloud to absorb higher costs and pass them to enterprise customers. Who eats the bill? Everyone down the stack.

The squeeze tightens from another angle. China is launching an antitrust probe against Nvidia, a two-front assault on the chip leader. And Nvidia has to pay 15% of its Chinese revenues to the US government under a deal struck this summer, salt in the wound.

What is on the line is massive. China generated $17 billion in revenue for Nvidia in fiscal 2024, accounting for 13% of the company’s total sales. That stream now faces a hard stop as China pushes toward semiconductor independence. My read, this is not a one-day story. The next moves will set the tone for the AI era, and maybe the bill for everyone using it.