Bloomberg Says "No Evidence Found of Chip Acquisition"
China Plans Massive Data Centers, but US Export Controls Remain a Hurdle
China is moving to secure a large quantity of Nvidia artificial intelligence (AI) chips and is planning to build massive data centers in the western desert regions. However, questions are being raised as to whether China will actually be able to obtain these chips, given the United States' tightening of advanced semiconductor export controls against China.
On July 9 (local time), Bloomberg reported, after analyzing investment approval documents, bidding papers, and corporate disclosures, that more than 115,000 Nvidia AI chips are scheduled to be installed in approximately 30 data centers planned for construction in China's western desert.
Once completed, the data centers are expected to be used for training large language models (LLMs) by Chinese AI startups such as DeepSeek. Bloomberg confirmed the construction site of a data center on the outskirts of Yiwu County in the Gobi Desert, Xinjiang Uygur Autonomous Region.
According to project approval documents, in the fourth quarter of 2024, local governments in Xinjiang and Qinghai provinces approved the construction of 39 data centers that will use more than 115,000 Nvidia chips.
With the US restricting exports of advanced Nvidia chips such as the H100 and H200 to China, how China will secure these chips remains a key issue. All companies participating in the project stated in their investment plans that their goal is to acquire Nvidia's H100 and H200 GPUs. Bloomberg estimated that purchasing these chips on the black market would require billions of dollars.
An employee at one of the largest investment firms in the Yiwu region stated that Chinese AI startups, including DeepSeek, have expressed interest in this project. The company plans to invest approximately 5 billion yuan in the project between 2025 and 2026.
Chinese documents obtained by Bloomberg did not specify any method for companies to secure Nvidia chips. The media outlet requested comments from the companies listed in the documents as well as central and provincial government officials, but received no response.
The US Congress is investigating 11 countries, including Singapore and Malaysia, over suspicions that they may be serving as alternative routes for the export of Nvidia's cutting-edge chips to China. Chinese AI companies such as DeepSeek claim they are training LLMs using Chinese-made chips and lower-spec Nvidia chips. However, industry experts still assess that there is a clear technological gap in advanced AI chips between the US and China.
Bloomberg interviewed more than ten individuals, including US government investigators familiar with the matter and figures involved in China's black market. However, they stated they were unaware of the construction of data centers in Xinjiang Uygur Autonomous Region, and did not know of any sophisticated illegal network capable of centrally procuring and managing more than 100,000 processors.
Two former senior officials from the Joe Biden administration estimated that there are about 25,000 prohibited Nvidia chips in China. However, one official noted that this quantity of semiconductors is only enough to power a single medium-sized data center, and that this number is not considered a cause for concern.
Bloomberg reported that it inquired with the Bureau of Industry and Security (BIS) under the US Department of Commerce about how many banned Nvidia chips the Donald Trump administration believed were in China, and whether Trump administration officials were aware of the Xinjiang project, but received no response.
Nvidia stated, "Because data centers are large and complex systems, smuggling is difficult, and we do not provide any support or repairs for products subject to export restrictions. Building data centers with smuggled previous-generation products makes no sense from either a business or engineering perspective."
In May, Nvidia CEO Jensen Huang said at an event in Taipei, Taiwan, that "there is no evidence of AI chips being diverted." However, a few weeks later, US Under Secretary of Commerce Jeffrey Kessler, without directly naming Nvidia, stated that AI chip smuggling clearly exists.
Bloomberg stated that it found no evidence that China has secured or will be able to secure 115,000 Nvidia chips subject to export controls.
Meanwhile, on the same day, the Financial Times (FT) reported that Nvidia plans to launch AI chips exclusively for the Chinese market in September, and that CEO Jensen Huang is planning to visit Beijing next week to seek a meeting with Premier Li Qiang. According to sources, the China-exclusive chip is a variant of the Blackwell RTX Pro 6000 processor. It is reportedly designed with advanced technology removed to ensure compliance with export regulations.
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