China Plans to Equip Data Centers with Nvidia AI Chips Amid Export Restrictions

China is constructing multiple large data centers across the country and intends to equip them with Nvidia's advanced artificial intelligence (AI) chips. This information was reported by Bloomberg, referencing a review of government documents. While China has set significant AI development targets, these efforts have been affected by U.S. export control regulations. The method by which firms may obtain the restricted Nvidia AI chips remains unclear.

According to the report, Chinese technology companies plan to install over 115,000 Nvidia AI chips in approximately three dozen data centers located in China's western provinces, including a major facility in Xinjiang. If these centers are equipped with the specified chips, the infrastructure could potentially support the training of foundational AI models similar to DeepSeek.

U.S. Export Controls and Their Impact

The United States began implementing restrictions on chip exports to China in 2022, citing concerns about potential military applications. These restrictions have become more comprehensive, now requiring government licenses for the export of certain advanced chips. As a result, acquiring Nvidia's graphics processing units (GPUs) has become a significant challenge for Chinese firms.

Officially importing a large quantity of AI chips is not feasible due to the export ban. The report indicates that Chinese companies may be considering indirect methods to obtain the chips, such as sourcing through other countries or the black market. Bloomberg interviewed several individuals who might have knowledge of such activities, but no specific information was provided.

Some sources have stated that thousands of restricted AI chips may currently be in circulation in China, though this number does not meet the demand described in the reviewed documents. The report also notes:

"Two senior Biden administration officials said they believe there are around 25,000 banned Nvidia chips in China — a number that, one of them added, would not be terribly concerning."

This quantity would be sufficient for a mid-sized data center, but not for the larger-scale projects currently planned in China.

Nvidia has adjusted its AI chips by reducing their capabilities to comply with U.S. export requirements. However, additional restrictions have been implemented to further limit access. Meanwhile, Huawei continues to produce AI chips with advanced features. Although Huawei's chips do not match Nvidia's in performance, they are adequate for current infrastructure needs. The approach that Chinese technology companies will take to acquire Nvidia's advanced AI chips remains uncertain.

Nvidia Stock Outlook

Analyst sentiment regarding Nvidia's long-term stock prospects remains positive. On TipRanks, Nvidia stock has a Strong Buy consensus rating, based on 35 Buy ratings, four Hold ratings, and one Sell rating. The average price target for Nvidia is $175.97, representing an estimated 10% potential increase from current levels. Year-to-date, Nvidia stock has increased by 19.2%.