Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Beijing has introduced energy efficiency rules for the use of advanced chips that would prevent Chinese companies from buying Nvidia’s best-selling processors in the country if implemented strictly.The National Development and Reform Commission, China’s top economic planner, is advising Chinese groups to use chips that meet stringent requirements in new data centres and expansion of existing facilities, according to documents reviewed and analysed by Financial Times.Nvidia’s H20 chip — less powerful than its top-range graphics processing units but tailored to meet Washington’s export controls — currently fails to satisfy the commission’s new rules, according to the documents.For several months, the Chinese regulator has quietly discouraged the country’s tech giants such as Alibaba, ByteDance and Tencent from purchasing H20 chips, said two people with knowledge of the matter.However, the rules have not been enforced strictly and are yet to dent China sales of H20 chips, which remain in strong demand, the people added.But the implications are stark if the commission decides to enforce the ban more tightly, creating a threat to Nvidia’s $17bn-a-year business in the country.As China rushes to build more data centres, the US chipmaker risks losing orders to domestic rivals such as Huawei, whose offerings better align with Beijing’s green agenda.In a bid to smooth tensions, Nvidia is seeking to arrange a sit-down meeting in the coming months between its senior executives and commission chair Zheng Shanjie, according to one person briefed on the plans.The NDRC’s restrictions, which were introduced last year but not previously reported, came amid growing US-China trade tensions as the nations seek to race each other in the development of advanced artificial intelligence.Beijing has pushed local companies to be less reliant on the products of foreign groups such as Nvidia, which makes the graphics processing units crucial to developing AI models.Since such curbs apply only to data centres being built, some companies work around them by swapping out old chips for H20s in their existing data centres, said people familiar with the matter.Non-compliance could trigger on-site inspections and subsequent fines, an issue most Chinese companies are keen to avoid, said one of the people. To deal with the threat, Nvidia has prepared a solution to make adjustments to H20 chips to meet the NDRC requirements, said one of the people. But such technical changes would reduce the chip’s efficiency and hurt its competitiveness in the Chinese market.The commission’s stance sends a jittery signal about Beijing’s posture towards Nvidia, the US chip titan navigating a high-stakes technological rivalry between Washington and Beijing.The H20 chip is Nvidia’s flagship offering in China and was approved for sale after the US tightened export controls in October 2023.Those curbs bar Nvidia from shipping its most advanced chips to China over fears they could bolster the country’s military prowess.Tech powerhouses from Alibaba to Tencent increased their orders for H20 chips aggressively this year after DeepSeek’s launch of its efficient reasoning model led to an AI boom in the country, said one of the people with knowledge of the matter.The surge in orders also comes amid expectations of further curbs on Nvidia’s chip sales to China. Bloomberg reported in January that Washington was exploring additional restrictions that might cover the H20 chip.Nvidia has increasingly been caught in the crosshairs of Chinese regulators. The State Administration for Market Regulation launched an antitrust probe in December, digging into whether Nvidia pulled back from chip sales to Chinese clients even before the US export ban kicked in late 2022, said a person with knowledge of the probe.China is Nvidia’s fourth-largest market, with a revenue base of $17.1bn, making up 13 per cent of its total sales, according to its annual report for fiscal year 2025.“Our products provide superb energy efficiency and value in every market we serve,” Nvidia said in a statement. “As technology moves rapidly, export control policy should be adjusted to allow US firms to offer the most energy efficient products possible, while still achieving the Administration’s national security goals.”Intel’s HL328 and HL388 chips also fail to comply with the NDRC’s environmental requirements, though the potential impact is likely to be small owing to their limited sales in China, according to people with knowledge of the measures. The NDRC did not respond to a request for comment.
