China to hit Nvidia with new environmental regulations – the company will lose up to $17 billion in revenue per year

Chinese authorities have introduced new energy efficiency standards for cutting-edge chips, which could prevent Chinese companies from buying Nvidia’s best-selling accelerators in China. The company itself could lose $17 billion in revenue per year, the Financial Times reports.

Image source: nvidia.com

China’s National Development and Reform Commission (NDRC) recommends using chips that meet strict requirements in new data centers and expansions of existing facilities, and Nvidia’s H20 accelerators, which are being made specifically for China to comply with U.S. sanctions, do not meet those requirements. In recent months, Chinese authorities have quietly discouraged domestic tech giants including Alibaba, ByteDance, and Tencent from buying the H20; those standards are currently not being strictly enforced and have not yet affected sales of the accelerators. But if the agency decides to tighten the ban, it would threaten Nvidia’s business in the country, where the company has annual sales of $17 billion.

As China ramps up its data center buildout, the American manufacturer risks losing orders to local rivals, including Huawei, whose products are more aligned with Beijing’s agenda. In an attempt to avoid an unfavorable scenario, Nvidia’s management is seeking to hold a meeting with the committee’s head, Zheng Shanjie, in the coming months. The new rules were introduced last year and have not been previously reported, and they arise amid trade tensions between the United States and China, which are competing to develop advanced artificial intelligence. Beijing is trying to reduce local companies’ dependence on products from foreign players like Nvidia, whose products have proven critical in developing advanced AI models.

Failure to comply could expose companies to on-site inspections and fines, all of which they are keen to avoid. To combat the threat, Nvidia has prepared a solution to make adjustments to the H20 accelerators, but these could reduce the component’s efficiency and make it less competitive in the Chinese market. Tech giants including Alibaba and Tencent have been aggressively ramping up H20 orders this year following the release of DeepSeek’s powerful R1 reasoning AI model.

Meanwhile, Nvidia is increasingly coming under the scrutiny of Chinese regulators: The State Administration of Market Regulation (SAMR) launched an investigation in December to find out whether Nvidia had restricted the supply of accelerators to China in 2022 even before the introduction of US sanctions. According to the results of the 2025 fiscal year, the company’s revenue in the country amounted to $ 17.1 billion – this is 13% of total sales. Intel’s HL328 and HL388 chips also do not comply with the new environmental requirements, but due to their insignificant presence on the market, large-scale consequences from possible measures against these products are not expected.