Chinese provinces offer steep power discounts to AI companies using China-made chips — country continues its aggressive push towards AI independence and homegrown silicon

The war for AI dominance just got a new front of sorts. According to a new report, some Chinese provinces are now offering steep discounts on industrial power pricing to AI datacenters, with only one catch: they have to use homemade chips rather than Nvidia’s or AMD’s.

According to a Financial Times article citing sources “familiar with the matter,” the provinces of Gansu, Guizhou, and Inner Mongolia are offering a 50% discount on industrial power prices to AI datacenters in the region. These cuts reportedly come on top of direct cash incentives and ought to bring the price of one kWh of industrial power down to 0.4 Yuan, or around 5.6 cents USD.

FT’s sources claim the cash incentives alone are good enough to run a data center for about a year. These inner provinces are fairly flush with power generation, and base pricing is around 30% lower than in the coastal regions. China’s power grid is seemingly well-suited to handling the AI-driven power draw, a fact that’s not hard to believe given the country’s massive push towards renewable energy sources.

This move comes in sequence of the Chinese government outright banning the usage of Nvidia AI chips. The ban immediately pushed AI datacenter power usage by a reported 30 to 50%, as the efficiency of Chinese chips lags behind that of Nvidia’s H20. It’s worth noting that H20 is from the Grace Hopper generation rather than the fresh Blackwell offerings. The newer chips are export-controlled by the U.S., but the power efficiency delta between Blackwell and Chinese chips would be greater still.

China is in the middle of a push for independence from US chip companies, while simultaneously boosting national chip production. The country has long since lagged in chip development but has made long strides in the past decade. Even if the national chips aren’t yet quite comparable to Nvidia and AMD’s offerings, the speed at which the country is catching up is impressive. Huawei, Cambricon, Alibaba, and Biren all make AI accelerators, with Huawei in the national lead with its Ascend 910C chip.

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