Inside China’s Secret AI Desert Empire: How Tens of Thousands of Banned Nvidia Chips Are Powering the Future of Artificial Intelligence
Deep in China’s remote northwestern desert lies a secretive tech megacity construction that could reshape the artificial intelligence world—the sprawling data centers of Xinjiang, potentially powered by tens of thousands of US-made Nvidia chips despite strict export bans.
China’s ambition to lead the global AI race is no longer confined to big coastal cities. Instead, in a vast desert region of Xinjiang, the Chinese government and private companies are building a formidable “AI desert empire” consisting of dozens of massive data centers. These centers are intended to form the backbone of China’s AI infrastructure, aiming to power advanced AI models that could rival those developed in the United States and beyond.
A Bloomberg investigation uncovered that this isolated AI hub is set to house more than 115,000 high-end Nvidia chips—the industry standard for training large language models and other AI tasks. These chips, known as Nvidia H100 and the newer H200, are officially banned from export to China by the US government, which has been engaged in ongoing efforts to control the flow of such advanced technology to Beijing. Yet, evidence suggests that China is aggressively pushing forward with these imports or potentially finding ways around restrictions.
This desert city is backed by local government approvals for at least 39 data center projects, signaling the scale and seriousness of this resource-intensive AI buildout. China’s strategy is to combine this computing power with domestic innovation from promising AI startups like DeepSeek, which has already made global waves. It’s part of a broader goal not just to close the AI gap with the US but to emerge as a leader offering AI technologies and infrastructure globally, especially targeting emerging markets.
The US, meanwhile, is investing billions into chip manufacturing and AI research to maintain its edge, emphasizing the high-stakes tech rivalry. But while the US AI power is concentrated in a few giant tech players, China aims to democratize access through a utility-style infrastructure, enabling widespread innovation among developers across the country.
However, challenges remain for China in securing reliable AI chips domestically, building cheap, scalable power sources, and fostering an innovation ecosystem to rival American giants. Whether this desert project will fully materialize or represent a flash of ambition remains to be seen, but the stakes are undeniably high as AI technology becomes a cornerstone of future economic and military power.
Glossary:
- Nvidia H100/H200 Chips: High-performance microprocessors used for training advanced AI models.
- Data Center: A facility used to house computer systems and associated components, like telecommunications and storage systems.
- Large Language Models (LLM): Advanced AI models capable of understanding and generating human-like text.
- AI Infrastructure: The hardware, software, and network resources necessary to develop, train, and run AI applications.
- Export Ban: Government-imposed restrictions on the trade of certain technologies or goods to specific countries.
Source: https://www.bloomberg.com/news/articles/2025-07-31/video-the-secret-rise-of-china-s-ai-desert-empire
