Nvidia has allegedly instructed data center operators to limit business from Chinese customers to 49% of their total clientele under a new global policy, according to a report by the Financial Times. The policy requires that 51% of customers must be non-Chinese entities and applies to new and future contracts with data center service providers worldwide. The FT reports the policy was communicated through Nvidia's sales force and regional teams without formal documentation. The move comes amid ongoing US government efforts to restrict China's access to advanced AI hardware, with American policymakers seeking to limit Beijing's artificial intelligence capabilities through export controls on high-performance chips.
Nvidia Sets 49% Limit on Chinese Data Center Customers
The alleged policy requires data center operators who sell services to Chinese companies to track what proportion of their overall business these customers represent. The 49% limitation ensures that the majority—51%—of a data center's clientele consists of non-Chinese entities. The FT reports that Nvidia's sales force and regional teams have communicated this policy to customers, though it does not appear to have been documented in any official form.
The restriction applies globally, affecting data centers in all regions rather than only those located in Asia. Existing Nvidia hardware leasing agreements remain unaffected, with the policy applying exclusively to new and future contracts.
Nvidia Responds to Policy Reports
In a statement, Nvidia notes that "American chips are the foundation that American model and application makers need to compete worldwide." The company adds that current U.S. policy "encourages" cloud providers to build on American infrastructure and to accept business from "everywhere they can."
US-China AI Hardware Restrictions Continue
The alleged customer limitation policy emerges within the context of ongoing tensions between the United States and China regarding AI capabilities. Nvidia can only sell its chips to whitelisted companies, a situation that has led to a thriving black market for its products. Earlier this year, five-year-old Nvidia A100 servers were found to have tripled in price in China due to high demand.
China's state-owned telecoms giant China Telecom was recently found to have Nvidia hardware in its data centers. Nvidia CEO Jensen Huang was reportedly the target of a spy plot by Chinese agents, according to previous reports.
The U.S. government's attempts to limit China's access to Nvidia hardware aim to restrict China's ability to advance its own AI technologies. Nvidia chips remain the preferred option for AI servers and data centers globally. The limitation on which customers cloud service providers can accept could potentially reduce the pool of potential customers for data center operators.
FAQ
What percentage limit did Nvidia allegedly set for Chinese data center customers?
According to the Financial Times report, Nvidia allegedly instructed data center operators to limit business from Chinese customers to 49% of their total clientele, ensuring that 51% are non-Chinese entities. The policy applies to new and future contracts with data center service providers worldwide and does not affect existing hardware leasing agreements.
Why is Nvidia allegedly implementing restrictions on Chinese customer business?
The alleged policy comes amid ongoing tensions between the United States and China regarding AI capabilities. The U.S. government has been working to limit China's access to advanced AI hardware through export controls, aiming to restrict Beijing's ability to advance its artificial intelligence technologies. Nvidia chips are the preferred option for AI servers and data centers globally.
