China’s ambitious AI push faces supply roadblock in Nvidia chip haul - Bloomberg

Published 08/07/2025, 22:44
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Investing.com -- Chinese tech firms have laid out plans to install more than 115,000 Nvidia (NASDAQ:NVDA) AI chips in at least three dozen data centers across remote western provinces, including a massive compound in Xinjiang, according to a Bloomberg News analysis. That level of infrastructure, if established, could be sufficient to support advanced artificial intelligence systems on par with foundational models like DeepSeek.

The proposed expansion marks a striking ambition by Beijing to build up domestic computing power, even as restrictions from Washington threaten to stall such aspirations. Amid President Xi Jinping’s calls for breakthroughs in core technologies, AI R&D has emerged as a focal point for civil and military innovation.

Yet the supply chain for this endeavor remains cloaked in uncertainty. The Nvidia chips in question are subject to stringent U.S. export controls, first imposed in 2022, and cannot be legally sold to China without government-issued licenses, which have not been granted to date.

The filings reviewed by Bloomberg omit details on how Chinese companies intend to acquire the restricted chips lawfully. Moreover, both the companies named and government officials in Beijing have declined to explain their sourcing strategies, raising questions about feasibility and compliance.

To assess the plausibility of such a large-scale acquisition, Bloomberg interviewed more than a dozen individuals familiar with U.S. investigations into unauthorized chip exports, as well as sources with insight into the Chinese black market. None had prior knowledge of the plan to concentrate so many high-end chips in a facility in Xinjiang.

All sources confirmed the likely presence of some banned Nvidia semiconductors in China, but uniformly expressed skepticism about the country’s ability to coordinate a covert network capable of delivering such high volumes undetected. The consensus, they said, was that any current underground trade couldn’t sustain an operation of this scale.

Estimates among U.S. investigators and officials vary widely, underscoring the lack of reliable data on exports and ending-use monitoring. While some contacts cited tens of thousands of chips potentially in circulation, with Bloomberg reporting, “Two senior Biden administration officials said they believe there are around 25,000 banned Nvidia chips in China — a number that, one of them added, would not be terribly concerning.”

Even at that level, officials noted that such a volume of high-end chips would be sufficient to operate only a mid-sized data center, far short of the scale outlined in Chinese planning documents. Without a clear pipeline to legally acquire chips at scale, China’s AI goals may remain constrained by the limits of global semiconductor governance.

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