Local governments in data-heavy provinces such as Gansu, Guizhou, and Inner Mongolia rolled out these incentives to help tech giants like ByteDance, Alibaba Group Holding Ltd (NYSE:BABA), which have been grappling with surging power costs after Beijing barred companies from purchasing Nvidia AI chips.
Nvidia's China Woes
However, Nvidia CEO Jensen Huang stated that China already has a strong semiconductor ecosystem and that collaboration benefits both nations. He described China as an irreplaceable and "dynamic market."
Despite the ban, CNBC commentator Jim Cramer argued that the policy still leaves Nvidia with "a lot of latitude" to operate in China, emphasizing that Trump has not "banned Nvidia from China."
Alibaba
Alibaba's stock also dropped on Tuesday after the report. It is a key Nvidia client, also known as China's tech barometer.
Industry sources said authorities introduced the subsidies after tech firms complained about higher energy expenses from using less efficient homegrown chips developed by Huawei and Cambricon.
As part of this push, Alibaba launched a new computing pooling system, Aegaeon, that slashed its reliance on Nvidia graphics processing units by 82% for AI model training.
U.S. and China have been at loggerheads since Washington imposed technological sanctions on its Asian counterpart, triggering a semiconductor chip crisis for gadgets ranging from smartphones to automobiles. China followed with its retaliatory measures.
NVDA Price Action: Nvidia shares were down 2.44% at $201.83 at the time of publication on Tuesday. The stock is approaching its 52-week high of $212.18, according to Benzinga Pro data.
Read Next:
Image via Shutterstock
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
To add Benzinga News as your preferred source on Google, click here.
