Nvidia Is Advertising Partnerships With Firms Partly Owned By The Chinese Communist Party

Key Concepts

Nvidia Partnerships in China: Nvidia's advertising of compute partnerships with Chinese firms, some of which have ties to the Chinese government and military.
ZTE: A Chinese telecom company partly owned by the Chinese government, subject to US restrictions due to military ties and past sanctions violations.
US Export Restrictions: US laws and regulations limiting the sale of advanced AI chips to China due to national security concerns.
FCC "Covered List": A list maintained by the Federal Communications Commission of companies deemed a threat to US national security, prohibiting the use of federal subsidies for their equipment.
Circumvention Tactics: Chinese firms using subsidiaries and rental agreements to obtain restricted US chips.
H.20 Chip: A slower version of Nvidia's AI chip developed to comply with US export restrictions, with its sales later subject to a revenue-sharing condition with the US government.
Nvidia's Market Strategy: Nvidia's acknowledgment of the restricted Chinese market and its impact on their forecasts, while seeking to maintain a competitive presence.
Chinese Military Procurement: Continued attempts by the Chinese military to acquire Nvidia chips despite US laws.
Financial Impact: China's significant contribution to Nvidia's revenue and the recent decline in sales due to export controls.

Nvidia's Partnerships with Chinese Firms Linked to Government

Nvidia, a leading American chipmaker, is facing scrutiny for advertising compute partnerships on its website with companies closely linked to the Chinese government. This comes despite existing US restrictions on selling advanced AI chips to China, driven by concerns that these chips could be used against the US.

Key Partners and Their Backgrounds:

ZTE: Listed as an "elite" partner, signifying the deepest level of partnership with Nvidia. ZTE is a telecom company partially owned by the Chinese government. It has a history of US restrictions due to its ties to the Chinese military.
- Past Violations: In 2017, ZTE pleaded guilty to violating US sanctions on Iran and misleading regulators.
- National Security Designation: In 2020, the FCC designated ZTE as a threat to US national security, alongside Huawei, citing a "unique threat to the security and integrity of the nation's communications networks and communications supply chain."
- FCC Ban and Investigation: ZTE was added to the FCC's "covered list" in 2021, and the FCC voted to ban new ZTE product sales in the US in 2022. The company is currently under FCC investigation for potentially evading this ban.
Beijing Advanced Digital Technology AdTech Limited (AdTech): Also an "elite" partner. This firm specializes in data storage and financial products and serves sanctioned entities, including Inspur and Huawei.
Sino Info Co. Limited: Another "elite" partner. This company is a project of the China Credit Reference Center, a state-owned entity that collects financial and employment history data on Chinese citizens.

Nvidia's website categorizes its Chinese partners into three tiers: registered, preferred, and elite. The partnerships are described as being for "networking" and "compute" purposes.

Regulatory Landscape and Nvidia's Stance

Current US laws and regulations do not explicitly prohibit Nvidia from partnering with companies like ZTE, AdTech, and SinoInfo. However, these regulations may restrict the sale of specific advanced chips to these partners.

Nvidia's Statement:

Patrick Rutherford, a spokesperson for Nvidia, stated: "The regulatory landscape does not allow us to offer a competitive data center GPU in China, leaving that massive market to our rapidly growing foreign competitors. We do not include that market in our forecast. When we were able to supply the market, we followed the government's direction on which companies were restricted. We worked only with approved partners for commercial non-military uses."

ZTE, Beijing AdTech, and Sino Info did not respond to requests for comment.

Chip Sales and Export Controls

Nvidia has historically sold a less advanced version of its AI chip, the H.20, to Chinese firms. This chip was developed partly in response to US export restrictions.

Trump Administration Policy: Earlier this year, President Trump initially banned the sale of any Nvidia semiconductors to Chinese firms. This was later reversed to allow H.20 sales under the condition that the US government receives a 15% revenue cut.
Advanced Chip Ban: The most advanced Nvidia chips remain blocked from sale in China.
White House Opposition to New Bill: Last Thursday, the White House urged legislators to oppose a bill that would mandate chipmakers like Nvidia to prioritize American customers over sales to China and other perceived foreign adversaries.

Circumvention of US Bans

Despite US export controls, Chinese firms have reportedly employed strategies such as using obscure networks of subsidiaries and rental agreements to circumvent US government bans and acquire restricted chips.

Indictment of Individuals: Over the weekend, four men were indicted for illegally selling Nvidia chips to Chinese companies. One of these individuals was the CEO of a company identifying itself as an "Nvidia cloud partner."
Chinese Military Attempts: The Chinese military has continued to attempt to purchase Nvidia chips, despite existing laws designed to prevent such acquisitions.

Financial Impact on Nvidia

The high demand for Nvidia's chips has propelled it to become the world's most valuable company.

China's Revenue Contribution: In the last financial year, China accounted for 13% of Nvidia's revenue, totaling $17 billion.
H.20 Sales: Nvidia reported generating only $50 million in H.20 sales since the export ban was lifted in April.
Q3 2025 Revenue Decline: Nvidia's Q3 revenues for China in 2025 are projected to be $3 billion, a significant 63% drop from $8 billion in Q3 2024.

For more detailed information, readers are directed to Emily Baker White's article on Forbes.com.