China to Establish Major AI Hub in Desert, Reports Say

Chinese companies plan to purchase over 115,000 high-tech Nvidia chips to power new facilities and further train AI models, according to Bloomberg, citing investor documents and tax filings.

In the remote desert region of Xinjiang in northwestern China, dozens of data centers are being constructed to house processors. It remains unclear how firms plan to acquire the chips, given the ban on their export by U.S. authorities.

The agency interviewed more than ten individuals involved in U.S. government investigations on the matter, as well as several sources familiar with China’s black market.

According to media reports, around 25,000 banned Nvidia chips are located in China. However, this figure does not raise significant concern, as such a quantity could support at most one medium-sized center.

Nvidia emphasized that “attempting to assemble a data center from smuggled previous-generation chips makes neither business nor engineering sense,” especially given the wide availability of servers and processors manufactured by Huawei within China.

Bloomberg could not find evidence that the country has already accumulated 115,000 banned chips or is capable of doing so. Nonetheless, construction continues.

The U.S. banned the import of advanced Nvidia chips in October 2022. Since then, Washington has repeatedly tightened restrictions, prohibiting the supply of various types of semiconductors and production equipment to China.

China considers data as the fourth factor of production alongside labor, capital, and land.