China has ordered state-backed data centres to use only domestic artificial intelligence chips, marking a significant escalation in its efforts to reduce reliance on foreign technology, reported Reuters.

New guidance from Chinese authorities mandates that data centre projects receiving state funds must exclusively deploy locally-made AI chips. Regulatory bodies have instructed sites under 30 per cent completion to remove foreign chips or cancel planned purchases. More advanced projects will be reviewed individually, sources told Reuters.

The directive is seen as one of China's strongest moves yet to purge foreign technology from its strategic infrastructure. It comes during a lull in trade tensions with Washington, as Beijing pushes for self-sufficiency in AI chip development.

Access to high-end AI chips, such as those produced by Nvidia, has been a flashpoint in US-China relations. Both nations are vying for supremacy in advanced computing and artificial intelligence capabilities.