China is drafting rules to limit how many advanced AI chips domestic companies can buy from foreign suppliers like Nvidia. According to Nikkei Asia, Beijing plans to cap total volumes rather than imposing an outright ban. This move attempts to balance the strong demand from major tech firms with support for the domestic semiconductor industry.

The policy emerges as the United States recently allowed sales of Nvidia’s powerful H200 chips to continue into the Chinese market. Major technology groups, including ByteDance, still rely heavily on these high-performance processors. Companies will likely need to justify their specific requirements to secure limited initial allocations, which could arrive as early as this month.

Beijing has held ongoing discussions with tech leaders to evaluate foreign chip usage while pushing for domestic alternatives. This regulation creates new uncertainty for global hardware suppliers and Chinese AI developers. The final implementation will determine how severely this impacts the ongoing AI infrastructure build-out across the region.