China Weighs Easing NVIDIA AI Chip Curbs

China is considering easing restrictions on the purchase of NVIDIA AI chips, potentially allowing domestic companies like ByteDance and Alibaba to acquire the new RTX Pro 5500 chip. This move could signal a change in the Chinese government's approach to foreign chips, which has prioritized nurturing its own semiconductor industry.

The Chinese Ministry of Industry and Information Technology has directed major IT firms to report their purchase plans and intended uses for the RTX Pro 5500. ByteDance is reportedly considering an order of around 1 million units. The shortage of AI chips in China has been exacerbated by the rapid expansion of AI services, causing a surge in computing demand.

Huawei, a major player in the industry, has admitted that its production capacity is insufficient to meet domestic demand and has no plans to enter overseas markets. Alibaba has also struggled with supply shortages, requiring significant expansion of its data center infrastructure. The RTX Pro 5500, originally designed for engineers and designers, is being considered for use in servers as a powerful computing resource for AI models.

This chip is not currently on the U.S. export-controlled list for China, and industry observers believe it is likely to remain outside future restrictions. NVIDIA CEO Jensen Huang previously noted that the company's market share in China's high-performance AI chip market plummeted from 95% to 0% due to U.S. export controls. If approval is granted, NVIDIA could regain ground in China's AI market after a year without presence.

NVIDIA plans to ship approximately 500,000 units per quarter to China starting late December, with customers required to finalize their orders by Nov. 30. If implemented, this move could help NVIDIA maintain its ecosystem among Chinese developers and potentially boost its earnings momentum.