(MENAFN- Live Mint) The White House has reportedly notified other federal agencies that it will not allow Nvidia to sell its newest, scaled-down Artificial Intelligence (AI) chips to China, The Information reported on Thursday, citing three people familiar with the matter.

This move signals Washington's ongoing efforts to restrict China's access to high-end AI hardware. At the same time, this crackdown on foreign AI chips is also dealing a major blow to Nvidia's hopes of gaining back its lost market share in China, a concern that CEO Jensen Huan has repeatedly voiced.

While US President Donald Trump believes that restricting sales of Nvidia's AI chips to Beijing will help America win the global AI race, Jensen Huang disagrees, warning that China could ultimately surpass the United States.

Key chip details and market need

Prior to the White House's decision, Nvidia had already provided samples of the B30A chip to several of its Chinese customers, according to the report.

The chip in question is known as the B30A. Despite being a“scaled-down” version, it is still powerful enough to be effectively utilised for training large language models when organised in large clusters - a crucial capability that many Chinese technology companies require, the report added.

What does Nvidia plan to do now?

Nvidia is not yet giving up on the Chinese market as the company is actively working on modifying the B30A's design in hopes that the US administration will reconsider its current stance, the report said, citing two company employees.

An Nvidia spokesperson confirmed the competitive landscape in China, by telling Reuters that the company currently has“zero share in China's highly competitive market for datacenter compute, and do not include it in our guidance.” The American chipmaking giant had a 95% market share in Beijing in 2022.

Huang earlier warned about the disadvantages of missing out on the Chinese market. He stressed the importance of maintaining a connection to the Chinese ecosystem, saying that the country is home to nearly half of the world's AI researchers.

“I think it's a mistake to not have those researchers build AI on American technology,” he said earlier.

China's ban on Nvidia's AI chips

This announcement comes just a few days after the Chinese government issued official guidance, mandating that new data centre projects receiving state funds use domestic AI chips, according to Reuters.

The foreign-made semiconductor chips currently being used in China include Nvidia's H20, B200, and H200 chips.

According to the news report, the Chinese authorities have ordered data centres that are less than 30% complete to dump all foreign-made chips or cancel their plans to purchase them. However, for some projects, which are already at an advanced stage, the decision to remove all foreign-made chips will be made on a case-by-case basis.

US President Donald Trump, in an interview last week, said that the United States will let China“deal with Nvidia” but not in terms of the most advanced chips. According to the agency report, China's crackdown on foreign AI chips will cut Nvidia's hopes of gaining its Chinese market share.

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