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The story maybe untrue but China officially use Linux as default on all government institutions (that is almost all institutions and corporations there is government owned), and to connect Nvidia last updated Linux driver before Fermi went into being and will never support Linux anymore officially, other reason behind is the architecture itself cannot support it so. (See wikipedia about it) They pass the burden to third party group to make it. Nvidia never release an opensource driver for Linux unlike the competitor and that adds up the burden to the buyer if they are Linux based.
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As I understand the truth is that:
-the chinese government have their own mips based cpu (only used by gov/schools as the rest of china uses x86). It's long term future is debatable at best.
-they wanted the option to use nvidia gpu's with these (quite how many gov/school machines need gaming graphics is again debatable).
-to do this nvidia needs a mips port of their drivers, which is a big thing. Two ways of doing this:
a) nvidia release source/driver details and gpu details to let chinese make their own drivers. Nvidia not to keen on this as they won't release this sort of info to anyone let alone the country that are masters of the cheap knockoff.
b) nvidia write the drivers, nvidia offered to do this for lots of money. Chinese said no we refuse to spend the money. Nvidia then declined the contract.
The truth of this is there wouldn't be much money in this, it would be a lot of work, and the platform is probably going to die a death anyway.