What China ban means for Nvidia's billions and who gains in Beijing?

China has reportedly directed its biggest technology firms, including ByteDance, Alibaba and Tencent, to stop buying Nvidia's artificial intelligence chips and cancel existing orders

In the fight between nations, as history often tells us, it is mostly the businesses which bear the first scars. In the pre-modern world, merchants remained wary of wars for the disruption of their trade routes. Today, companies dread disputes that bring sanctions, restrictions and losses. In a world edging increasingly towards multipolarity, the push and pull between the United States (US) and China seems to be hitting firms which are trying to form the bedrock of technological advancements. Huawei was the first casualty when Western nations imposed bans. Now, China has struck back, ordering its tech giants to stop using Nvidia’s chips.

 

 

On Wednesday (September 18), China reportedly directed its biggest technology firms, including ByteDance, Alibaba and Tencent, to stop buying Nvidia’s artificial intelligence (AI) chips and cancel existing orders. The order, issued by the Cyberspace Administration of China, covers the RTX Pro 6000D, a processor developed by Nvidia specifically for the Chinese market to comply with the US export restrictions.

 

The move follows earlier curbs that blocked sales and testing of Nvidia’s H20 chip, another model being built specifically for China. Officials framed the decision as a step to limit foreign dependency and promote local alternatives, even as Washington’s export controls continue to restrict the flow of advanced semiconductors into China.

 

What is the root of China-Nvidia fallout? 

Nvidia’s troubles in China can be traced back to 2022, when Washington introduced sweeping rules curbing exports of high-performance computing and semiconductor technology to Chinese companies. These rules targeted chips used in AI training and advanced data centres.

 

To maintain access to China, Nvidia began designing downgraded versions of its flagship processors, such as the H20 and the RTX Pro 6000D. The aim was to stay within the US regulatory limits while still serving Chinese demand. At the same time, Nvidia explored expanding its research and development presence in Shanghai. 

 

But Beijing’s own push for semiconductor independence has picked up pace in recent years. Under successive plans, including Made in China 2025, authorities invested heavily in domestic chipmakers, cloud infrastructure and national computing power projects. That set the stage for a confrontation in which foreign suppliers like Nvidia were increasingly viewed as risks rather than partners.

 

Nvidia’s China business before the ban 

China and Hong Kong were once among Nvidia’s largest overseas markets. In FY25, the region contributed about $17.1 billion, or nearly 13 per cent, of the company’s total revenue, according to company filings.

 

Overall, Nvidia reported revenue of $46.7 billion in the second quarter of FY26, up 56 per cent from a year earlier, with its data centre business accounting for more than $41 billion. Net income during the quarter was $26.4 billion. These results underscore the company’s reliance on its data centre and AI chips, of which China had been a major buyer.

 

The latest restrictions now cast doubt over whether Nvidia can continue to count on that market.

 

At the same time, Nvidia’s rapid expansion in other regions provides some cushion. Demand from US and European cloud service providers, AI start-ups and enterprise customers has surged, helping offset weakness in China. The company has also deepened ties with Middle Eastern and South Asian clients seeking large-scale AI infrastructure.

 

Why Beijing is confident it can do without Nvidia 

China’s decision to block Nvidia chips rests on confidence in its domestic alternatives. Huawei has taken a lead role, recently outlining a roadmap for its Ascend AI chips, with the Ascend 950 due in 2026 and successors planned through 2028. It has also unveiled “supernodes” capable of housing thousands of its processors for large-scale computing, according to a report by the South China Morning Post.

 

Cambricon Technologies, another domestic player, reported a more than 4,000 per cent surge in first-half 2025 revenue, swinging to profit as demand for its AI accelerators soared.

 

Officials and state media have said that in some benchmarks, these chips now match or exceed the performance of Nvidia’s downgraded China-compliant models. That claim, along with Beijing’s heavy subsidies, has strengthened the government’s hand in ordering the transition away from Nvidia.

 

However, experts around the world believe that the transformation will not be so easy for the Chinese tech firms. Many Chinese technology companies have built their software and cloud systems around Nvidia’s CUDA platform and established hardware ecosystem. Moving to domestic chips may involve costs and potential delays.

 

How will the Nvidia ban impact Chinese domestic chip makers? 

Nonetheless, the broader impact is expected to accelerate China’s long-term semiconductor ambitions. Authorities are promoting domestic data centres powered by local processors and allocating large contracts to firms like Huawei and Cambricon.

 

Huawei and Cambricon stand to gain the most from Nvidia’s exit. Huawei’s Ascend line is already being positioned as the backbone of state-backed AI infrastructure, while Cambricon is seeing record orders from cloud and research institutions.

 

Other beneficiaries include Alibaba’s semiconductor unit T-Head and Tencent, both of which are developing in-house AI chips. With state backing and preferential procurement policies, these firms are likely to capture demand once reserved for Nvidia.

 

Nvidia’s alternatives beyond China 

Outside China, Nvidia continues to dominate. Its chips power nearly all major Western AI systems, from OpenAI’s training clusters to hyperscale data centres at Microsoft, Amazon, and Google. Emerging markets in the West and South Asia have also increased orders for Nvidia hardware as they invest in national AI infrastructure.

 

But the loss of a key market that once accounted for more than a tenth of its revenue will take some effort and time to absorb. Meanwhile, for Beijing, it is a statement of confidence in its ability to rely on homegrown alternatives.