Nvidia Orders Data Center Partners to Limit Exposure to Chinese Customers

Nvidia has instructed data center partners worldwide to keep Chinese customers below half their cloud computing business, according to people with knowledge of the matter.

The Financial Times reports that Nvidia’s sales force and regional teams have spent the summer verbally passing along a new rule to data center partners: sell at least 51 percent of cloud computing services to non-Chinese companies. No such restriction existed before. The instructions were never put in writing, people familiar with the rules said, and they apply globally rather than just to data centers in Asia, according to two people familiar with the matter. The rule covers only future contracts; existing leasing agreements are untouched.

Sources describe the move as pre-emptive, meant to head off criticism from U.S. lawmakers and other critics of Nvidia’s approach to China before it escalates further. Washington has been trying to close off routes that let intermediaries build a black market for Nvidia chips in China, and to stop Chinese companies from reaching advanced chips indirectly through overseas leasing deals.

Breitbart News previously reported that Nvidia cut off many customers after performing an audit to ensure chips were not being moved into China through the black market:

Nvidia has taken significant steps to tighten control over the distribution of its AI chips in Asia. The AI giant has established a new whitelist of verified customers that dramatically reduces the number of authorized clients by over fifty percent. This move comes as part of an intensified effort to prevent sophisticated AI processors from being illegally smuggled into China, where U.S. export restrictions have banned the sale of advanced AI chips since 2022. The remaining companies on the approved list have undergone rigorous compliance inspections designed to confirm they are legitimate businesses rather than shell companies created to funnel Nvidia GPUs and servers into restricted markets. Nvidia’s verification process reportedly has included sending field staff to inspect customer data centers, conducting contract verification procedures, and interviewing end users to authenticate business operations.

Nvidia, responding to the reporting, said: “Datacenters and clouds built on American chips are the foundation that American model and application makers need to compete worldwide. Longstanding U.S. policy encourages every cloud to build on American infrastructure and to win business everywhere they can. America’s longstanding policy has always supported the build-out of American infrastructure worldwide, bringing prosperity, influence, and jobs home.”

One Singapore-based cloud provider said it was “difficult to find enough non-Chinese clients outside the U.S.” to meet the new threshold, and warned about what strict enforcement would mean: “If strictly implemented, it will definitely hurt business.”

Breitbart News recently reported that Nvidia CEO Jensen Huang was targeted by a Chinese spy he developed a relationship with:

Authorities were already investigating whether Alice Huang was helping China obtain restricted advanced Nvidia AI chips before surveillance revealed she had developed a close relationship with Jensen Huang, according to a report by the New York Times. The discovery raised alarms due to Huang’s central role in the global AI race as the CEO of Nvidia, which produces the most powerful AI chips in the world. Nvidia, meanwhile, said Megaspeed is an ordinary regional customer and that Jensen Huang’s meetings with Alice Huang are routine CEO interactions with customers. “Jensen’s interactions with Ms. Huang are not unusual or unexpected. Meetings with customers are part of a C.E.O.’s job; Jensen talks with thousands of customer executives every year,” Nvidia spokesman John Rizzo told the Times.

The war to control AI between America and China becomes even more complex as the deep ties between U.S. tech giants and the Communist country become clearer. Breitbart News social media director Wynton Hall has written his New York Times bestseller Code Red: The Left, the Right, China, and the Race to Control AI to serve as the definitive guide on how the MAGA movement can create positions on AI that benefit humanity without handing control of our nation to the leftists of Silicon Valley or allowing the Chinese to take over the world.

Read more at the Financial Times here.

Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.