This concept of "losing face" may seem like just a small word or minor loss of reputation to Westerners, but in a sense is more important in China (and to varying extent all over the Far East) than even money.

If the story is true, and the depth of detail leads me to believe it is very likely, then the reputational damage to Nvidia would be high and, more importantly, entrenched (an aspect of face that makes it different from mere temporary reputational loss) due the public service, government angle and the size of the proposal.