Nvidia Asks Partners to Direct 51% of Cloud Services to Companies Outside China
Key Facts
The Financial Times reported, in an article published by Investing.com on November 3, 2026, citing five people familiar with the matter, that Nvidia had asked data center partners to reduce their exposure to Chinese customers. According to the report, the company is asking cloud computing customers to direct at least 51% of their services to non-Chinese companies. The guidance concerns the distribution of services provided by cloud partners and is not an announcement of a new ban on chip sales inside China. Reuters said it could not immediately verify the Financial Times report. The move places constraints on some of the computing arrangements Chinese companies use to run artificial intelligence applications.
The report said Nvidia sales and regional teams conveyed the instructions verbally, and that they were not issued in written documents. It added that the company had not previously imposed similar restrictions. This indicates that the guidance was communicated through partner channels, while the report provided no further details on how the percentage would be applied or when it would take effect. The stated condition focuses on ensuring that most of the services offered by cloud computing customers go to non-Chinese companies. Chinese companies that rely on those services may face changes to their arrangements for obtaining advanced computing resources.
The significance of these arrangements stems from the fact that many Chinese companies rely on renting advanced computing capacity through cloud services outside China, according to the report. Those companies have used the rented capacity for artificial intelligence tasks, including training models. As a result, the impact of restrictions on access to computing extends beyond direct chip shipments to include services provided by data centers outside China. The report placed Nvidia's instructions in the context of Washington's efforts to limit China's access to advanced U.S. chips through cloud computing deals. It did not estimate the volume of services or revenue that could be affected by the condition.
The developments come as Chinese activity data showed mixed signals in October. The new export orders index in the official survey fell to 48.7 from 50.0 in September, while the output index dropped to 49.8 from 51.7. In the RatingDog survey compiled by S&P Global, the manufacturing index came in at 52.0, compared with 52.1 in September, beating the Reuters poll forecast of 51.6. The non-manufacturing business activity index also registered 49.7, while the services index alone stood at 50.0. These readings provide a backdrop for Chinese industrial and services demand, but on their own do not determine the impact of Nvidia's guidance on its partners.
In its financial disclosure, Nvidia said it was not assuming any data center computing revenue from China in its forecast for the third quarter of fiscal 2027. The company's revenue in the second quarter of that fiscal year was $96.2 billion, up 106% year over year. The data center segment recorded revenue of $89.0 billion, up 117% from the same period a year earlier. The company said shipments of Hopper data center products to China were less than 1% of data center revenue in the same quarter. These figures provide context for China's limited presence in the company's disclosures on data center product revenue and shipments.
U.S. Bureau of Industry and Security guidance states that licensing requirements for advanced computing chips cover entities headquartered in China or Macau, as well as companies whose parent companies are headquartered in those destinations, even if the entities themselves operate elsewhere. The guidance was issued on May 31, 2026. In the market, Nvidia shares closed at $202.06 on November 2, compared with $204.64 on October 30. China's preliminary official calendar sets the next purchasing managers' index report for November 30, 2026. The instructions reported by the Financial Times remain the focus of the report, with Reuters noting that it could not immediately verify them.