Nvidia orders cloud partners to cap China exposure at 49 percent

Nvidia has told its data center partners that at least 51 percent of their cloud computing services must go to non-Chinese customers, according to the Financial Times. The directive came verbally — nothing in writing — and it applies only to future contracts, not existing leases.

That distinction matters for Southeast Asia. With direct access to Nvidia hardware in China heavily restricted, many Chinese companies have leased compute in Malaysia and Indonesia. Those are exactly the arrangements Nvidia's new rule could now limit.

What does the 51 percent rule change in practice?

For regional providers, the math is brutal. One Singapore-based group told the FT it's "difficult to find enough non-Chinese clients outside the US." Its blunt assessment: "If strictly implemented, it will definitely hurt business."

The directive sits on top of tightening that's already happened. Nvidia has more than halved the number of Asian customers authorized to buy its AI chips, and this year it introduced a "white list" of companies that cleared tougher compliance checks — a mechanism designed to stop GPUs from leaking into China.

The pressure isn't only coming from Nvidia. This week, Oracle reportedly walked away from a $7 billion deal with Tencent that would have given the Chinese cloud provider access to as many as 100,000 Nvidia GPUs. The deal collapsed under pressure from two directions: US officials leaned on Oracle, while Chinese officials pushed Tencent to back domestic chips instead.

How bad is the RTX Pro 5500 bottleneck?

On paper, Chinese buyers can still get hardware. The B300 remains banned from export to China, but the less powerful RTX Pro 5500 workstation card is cleared for shipping there.

Reality looks different. Bloomberg reports that Chinese AI developers expect to receive roughly one percent of the chips they've ordered over the coming months. Alibaba, Tencent, ByteDance and other Chinese AI and cloud firms have ordered about six million RTX Pro 5500 units in total — and will see only a few tens of thousands arrive over the next four months.

The shortfall stems from capacity constraints while Nvidia ramps production, not a policy change. Chinese hyperscalers estimate that if export controls stay as they are, they could receive around 700,000 units by the end of 2027 — about one in eight of what they've ordered.

Nvidia frames the squeeze as a two-way problem. "Unfortunately, US firms continue to be restricted by a combination of outdated US export controls, which cover gaming products released nearly half a decade ago, and China's own limits on US imports," a company spokesperson told Bloomberg.

What's the espionage subplot?

The commercial tightening lands alongside an espionage story. US agencies are investigating whether Nvidia CEO Jensen Huang was the target of a Chinese spy plot. Alice Huang — no relation to Jensen — is accused of working for the Chinese state.

The Megaspeed executive allegedly sent information to China, and her Singapore-based employer stands accused of shipping GPUs into the country. Megaspeed has denied the allegations.

For cloud operators outside the US, the takeaway is straightforward: Nvidia's compliance net now reaches into your customer mix, not just your export paperwork. If your book of business skews Chinese, expect harder conversations on renewals.