Tencent Cloud shifts to Chinese AI chips amid $50B Nvidia standoff

Tencent Cloud has fully integrated Chinese AI chips into its computing infrastructure, marking another significant step in China’s push for semiconductor self-sufficiency amid escalating U.S. export restrictions. The move positions Tencent as the latest major Chinese tech company to embrace domestic processors, while highlighting Beijing’s broader strategy to reduce reliance on foreign semiconductors like those from Nvidia.

What you should know: Tencent Cloud president Qiu Yuepeng announced the company had “fully adapted to mainstream domestic chips” within its AI computing infrastructure during the annual Global Digital Ecosystem Summit.

• The integration spans multiple domestic chip partnerships, with Tencent working to deploy “the most suitable hardware” across different AI scenarios.
• Senior executive vice-president Dowson Tong Tao-sang emphasized the company’s long-term investments in aligning hardware and software to develop cost-effective computing solutions.
• President Martin Lau Chi-ping confirmed Tencent has secured sufficient processors for AI training and “many options for inference chips” while advancing software improvements.

The big picture: China’s semiconductor independence drive is intensifying as geopolitical tensions reshape the global AI chip landscape.

• The State Administration for Market Regulation recently found that Nvidia violated antitrust rules in its $6.9 billion Mellanox Technologies acquisition from 2019, with investigations ongoing.
• Chinese authorities have reportedly discouraged companies from deploying Nvidia’s H20 chips, particularly in government and security-related projects.
• Beijing is requiring data centers to adopt more domestically produced chips, underscoring the government’s commitment to reducing foreign semiconductor dependence.

Competitive landscape: Tencent Cloud ranks as the fourth-largest AI cloud services provider in China with a 7% market share in the first half of 2025, trailing Alibaba, ByteDance, and Huawei according to Omdia, a market research firm.

• Chinese authorities reportedly instructed major firms including Alibaba, ByteDance, and Tencent to pause H20 purchases while a national security review is underway.

What Nvidia is saying: CEO Jensen Huang sees significant opportunity in the Chinese market despite current restrictions.

• “The opportunity for us to bring Blackwell to the China market is a real possibility,” Huang said, estimating China’s AI market could expand by 50% next year.
• “The China market I’ve estimated to be about $50 billion of opportunity for us this year, if we were able to address it with competitive products.”
• Huang argued Chinese developers should use Nvidia’s chips rather than rely on local alternatives, which could accelerate China’s domestic semiconductor development.

Key developments: Nvidia is reportedly preparing a new AI chip called B30A specifically for the Chinese market that will outperform its current H20 model.

• The chip features a single-die design with all major components integrated onto one piece of silicon.
• It’s expected to provide about half the computing power of Nvidia’s dual-die Blackwell Ultra GPUs.
• The Trump administration struck a deal in August allowing Nvidia to sell H20s in China, provided 15% of revenue goes to the U.S. government.