The United States’ (US) attempt to block China’s access to AI chips has backfired. Instead of weakening China, it has motivated the country to accelerate the development of domestic AI chips, reducing its dependence on US technology.

According to Reuters on Thursday (Sept 18, 2025), China Unicom has built a massive data center powered by locally made AI chips from Alibaba and several other domestic firms, CCTV reported.

This demonstrates China’s success in reducing reliance on foreign technology. The news surfaced as US officials raised national security concerns during trade discussions with China in Madrid this week.

Reports indicate that the US is planning to block shipments of chips and other advanced technologies to China.

Amid escalating geopolitical tensions between the world’s two largest economies, China has intensified efforts to encourage domestic companies to produce their own chips. The government has also warned local firms to stop using Nvidia chips from the US, citing security risks.

China Unicom’s data center, valued at US$390 million or about IDR 6.9 trillion, is located in Xining, the capital of Qinghai province. The provincial government stated that once completed, the facility will be able to handle computing power of up to 20,000 petaflops.

So far, the center has reached a capacity of 3,579 petaflops using nearly 23,000 domestically produced AI chips.

Alibaba’s chip unit, T-Head, supplies 71% of the total chips used, while the remainder comes from companies such as MetaX, Biren Tech, and Zhonghao Xinying.

China Unicom also plans to procure additional chips from Tecorigin (Wuxi), Moore Threads, and Enflame.

Alibaba’s T-Head has also developed an AI chip called PPU, featuring 96 gigabits of memory and HBM2e, a vertically stacked DRAM designed specifically for AI semiconductors.

This positions it as a strong competitor to Nvidia’s H20 chip, the most advanced product currently permitted for sale by US companies in China.

China Unicom, Alibaba, Biren, MetaX, Enflame, Tecorigin, and Zhonghao Xinying did not immediately respond to Reuters’ requests for comment. Moore Threads declined to comment.