China is offering massive power subsidies to major tech firms including ByteDance, Alibaba and Tencent in a bid to accelerate the adoption of homegrown artificial-intelligence chips and reduce reliance on U.S. technology.
According to people familiar with the policy, local governments in Gansu, Guizhou and Inner Mongolia have expanded subsidies covering up to 50% of electricity costs for data centres that use domestically produced AI processors, such as those developed by Huawei and Cambricon. The incentives exclude facilities still using Nvidia’s advanced chips, which remain under U.S. export restrictions.
The move is part of Beijing’s broader push to strengthen its semiconductor ecosystem and shield its tech sector from Washington’s export controls. China banned the purchase of Nvidia’s AI chips earlier this year, forcing companies to turn to less energy-efficient domestic alternatives — a shift that sharply increased power costs.
Sources said some of the new cash and electricity subsidies are large enough to offset an entire year of operating expenses, providing critical relief after months of complaints from industry players about the financial burden of using local chips.
Analysts say the measure underscores Beijing’s determination to make domestic AI hardware viable at scale and support its long-term goal of technological self-sufficiency, even as firms grapple with performance gaps versus foreign products.
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The subsidies highlight Beijing’s push to localise AI infrastructure and strengthen domestic chipmakers like Huawei and Cambricon. The move may boost Chinese semiconductor equities while signalling intensified U.S.–China competition in advanced computing.
