Nvidia has told its data center partners to reduce their exposure to customers in China.

The GPU giant has told cloud computing clients to sell at least 51 percent of their services to non-Chinese companies, the Financial Times reports. Nvidia told customers its new restrictions verbally, and not in written documents.

The new rule only covers future contracts and not existing leases. With restrictions on access to Nvidia hardware in China, many Chinese companies have leased compute in Malaysia and Indonesia. Such deals could face limits under Nvidia's rules.

Local cloud providers are struggling with the new requirements because it is “difficult to find enough non-Chinese clients outside the US”, one Singapore-based group told the FT. “If strictly implemented, it will definitely hurt business.”

This week, Oracle reportedly dropped a $7bn deal with Tencent, which would have seen the Chinese cloud provider access as many as 100,000 Nvidia GPUs. The deal fell apart amid pressure on Oracle from US officials, as well as pressure on Tencent from Chinese officials to support domestic chips.

Nvidia has already more than halved the number of Asian customers authorized to buy its AI chips. This year, it created a “white list” of companies that have passed tougher compliance checks, aimed at limiting the export of GPUs to China.

While B300s are banned from export to China, the less powerful RTX Pro 5500 workstation graphics card is cleared for shipping to the country. However, Bloomberg reports that Chinese AI developers expect to receive only one percent of the chips they have ordered in the coming months.

Alibaba, Tencent, ByteDance and other Chinese AI and cloud firms have in total ordered about six million RTX Pro 5500 chips, but will only receive a few tens of thousands over the next four months.

The low shipment number is due to capacity constraints, with Nvidia currently ramping up production. Should export controls not change, Chinese hyperscalers estimate they could receive around 700,000 RTX Pro 5500 units by the end of 2027.

“Unfortunately, US firms continue to be restricted by a combination of outdated US export controls, which cover gaming products released nearly half a decade ago, and China’s own limits on US imports,” an Nvidia spokesperson told Bloomberg.

The news comes following the revelation that US agencies are investigating whether Nvidia CEO Jensen Huang was the victim of a Chinese spy plot, with Alice Huang (no relation to Jensen) accused of working for the Chinese state.

The Megaspeed exec has been accused of sending information to China, while the Singapore-based company has been accused of sending GPUs to China. It has denied the allegations.