Despite US export restrictions on advanced AI chips, China plans to build numerous data centers powered by more than 100,000 Nvidia chips. These projects, spread across desert regions, primarily in Xinjiang in western China, will see the construction of approximately 40 new data centers. The largest planned facility is in Yiwu, Xinjiang. The project aims to deploy more than 70,000 Nvidia chips.
China to Build Data Centers with Nvidia Chips
According to Bloomberg, Chinese companies will utilize more than 115,000 Nvidia chips in these data centers. The scale of the project suggests the aim of building infrastructure for AI applications requiring high computational power, such as large language models. However, this goal faces a significant obstacle due to the US’s 2022 ban on the export of high-end Nvidia chips, such as the H100 and H200, to China.
Nvidia stated that establishing a data center is not limited to chip procurement alone; the infrastructure requires complex and long-term planning. The company maintains that new-generation data centers cannot be built effectively with banned or older-generation chips.
Despite this, allegations have surfaced that thousands of Nvidia H100 and H200 chips were smuggled into China illegally. US Deputy Secretary of Commerce Jeffrey Kessler confirmed reports of chip smuggling and stated that the smuggling was conducted through Singapore and Malaysia.
High-altitude and energy-rich areas such as Xinjiang and Qinghai are prominent among the regions where data centers will be built. These regions can provide low-cost and uninterrupted power through resources such as solar, wind, and coal.
A total of 39 data center projects in Xinjiang and Qinghai received official approval in the last quarter of 2024. All companies listed in the application documents stated that they plan to use Nvidia H100 and H200 chips.
However, selling these chips to China without a US license is legally impossible. It’s estimated that approximately 25,000 banned Nvidia chips are currently in the country. It’s also been suggested that Nvidia’s H20, customized for the Chinese market, could be included in these projects.
