China curbs US AI chips, shuns foreign capital in pursuit of tech self-reliance

“Small yard, high fence” was how Jake Sullivan, national security adviser under President Joe Biden, described US tech policy towards China.

The approach, designed to fence off sensitive US technologies from China, was most commonly associated with export controls that, among others, restricted Chinese firms’ access to Nvidia’s advanced chips, the critical inputs for developing cutting-edge artificial intelligence systems.

Earlier this week, Beijing told domestic tech ‍companies not to purchase Nvidia’s chips unless absolutely necessary, with new rules set to cap the total number of advanced AI chips that local firms can import, according to multiple reports.

A Chinese data centre employee told the Post that they have been preparing to build server stacks in Inner Mongolia based on H200 chips to serve major clients such as Alibaba Group Holding and ByteDance. However, the government had instructed the firm to reserve stack space for domestic chips, the person said. Alibaba owns the Post.

These restrictions signified a new phase in the US-China tech war where “the offensive and defensive roles have shifted”, said Arisa Liu, chief director and research fellow at Taiwan Industry Economics Services, a databank under the Taiwan Institute of Economic Research.