Nvidia has reportedly instructed its global data center customers to limit the proportion of their business conducted with Chinese companies to 49%, according to a Financial Times report. This new policy, communicated via verbal instructions from sales and regional teams rather than official documentation, requires that at least 51% of a provider's revenue comes from non-Chinese entities. The restrictions apply to new and future contracts worldwide but do not affect existing hardware leasing agreements.
The move aims to restrict Chinese access to high-performance AI computing hardware amid ongoing tensions between the United States and China. While Nvidia stated that American chips are the foundation for global competition and that U.S. policy "encourages" cloud providers to accept business from everywhere they can, the reported revenue cap targets the growing trend of Chinese firms renting advanced compute power through overseas data centers. This includes companies like Moonshot, Tencent, ByteDance, Alibaba, and MiniMax, which have sought to secure capacity in Southeast Asia and Europe to bypass domestic supply shortages and U.S. export controls.
Data center operators in regions like Southeast Asia face potential operational challenges due to the policy. One Singapore-based group told the Financial Times that it is "difficult to find enough non-Chinese clients outside the US," suggesting that the cap could force some providers to reduce their total supply. The restrictions also coincide with increased oversight, such as a requirement for Southeast Asian providers seeking to become Nvidia Cloud Partners to implement Fleet Intelligence tracking.
The demand for Nvidia hardware in China remains high despite existing restrictions. While Chinese firms have purchased over 6 million export-compliant RTX Pro 5500 cards, they continue to seek high-end systems like the Blackwell-based B300. Reports indicate that a B300 rack, which sells for approximately $600,000 internationally, fetched $2.8 million in China last month. Additionally, some sources told CNBC that Chinese entities have been proposed to pay 30% to 50% more upfront than non-Chinese entities to secure capacity.
Domestic Chinese chip production is currently unable to meet the scale of local demand. While companies like Huawei, Alibaba, and Baidu are expected to contribute to a total supply of 3.5 million chips this year, that figure falls significantly short of a demand expected to exceed 5 million. This gap has fueled a thriving secondary market, with the price of certain Nvidia servers reportedly tripling in China over the last year.
