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China plans to deploy 115K banned Nvidia AI chips despite U.S. restrictions
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Chinese companies are planning to deploy approximately 115,000 restricted Nvidia AI chips across dozens of data centers in Xinjiang, despite U.S. export bans that have prohibited such sales since 2022. The ambitious infrastructure project highlights China’s determination to build AI computing capacity using banned semiconductors, though U.S. officials and Nvidia question whether such large-scale smuggling operations are feasible.

What you should know: The data center plans center around Xinjiang’s energy advantages and a massive government-backed computing facility.

  • Around 70% of the planned computing power is concentrated in a single compound backed by the Xinjiang regional government, likely the “converged computing center” announced for Urumqi in April 2024.
  • Local governments in Xinjiang and nearby Qinghai approved 39 data center projects in the fourth quarter of 2024 alone, with at least seven under construction or secured for AI compute services by June 2025.
  • The region’s abundant solar, wind, and coal power resources make it strategically attractive for energy-intensive AI operations.

The big picture: China’s plans involve acquiring chips that have been subject to escalating U.S. restrictions over national security concerns.

  • The targeted Nvidia H100 and H200 GPUs (graphics processing units, the specialized chips that power AI systems) have been banned from Chinese sales since 2022, with restrictions expanding to include the H20 chip—a China-specific version—in April 2025.
  • Nvidia took a $4.5 billion charge in the first quarter of fiscal 2026 due to diminished H20 demand following the expanded restrictions.
  • The company began developing new China-compliant chips in May 2025 to align with current U.S. export controls.

Why this matters: The scale of the reported plans far exceeds what experts believe is possible through black market channels.

  • U.S. officials estimate only around 25,000 restricted Nvidia chips have reached China through smuggling networks.
  • Sources familiar with U.S. investigations and China’s black-market hardware channels expressed skepticism about the existence of networks capable of moving over 100,000 high-end processors.

What they’re saying: Nvidia emphasizes the practical limitations of building data centers with restricted hardware.

  • “A company merely posting online inquiries for restricted GPUs does not equate to building a functioning data center,” Nvidia told Bloomberg.
  • The company stressed that modern data centers require extensive support and engineering, adding that it doesn’t offer services or repairs for restricted chips.
  • Nvidia noted that relying on “outdated or smuggled chips to power data centers is neither efficient nor cost-effective, especially given the local availability of Huawei chips.”

Key details: The investigation revealed limited transparency from Chinese officials regarding the projects.

  • Bloomberg’s findings were based on reviews of investment approvals, tenders, and corporate filings, with Nyocor, a Tianjin-based energy firm, being the only company specifically named.
  • The Xinjiang government and China’s Ministry of Industry and Information Technology did not respond to requests for clarification about the projects.
China aims to deploy 115,000 Nvidia AI GPUs: Report

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