NVIDIA's H20 AI chips have reportedly been barred from being purchased by AI tech giants from China, amid reports of security backdoors that are concerning Beijing.
China's Big AI Firms, That Account For a Major Portion of NVIDIA's Revenue, Might Not Buy Additional H20 AI Chips
Well, things aren't turning out how they should for NVIDIA's business in China right now. After Jensen struggles to get the green light from the Trump administration to sell its chips to China, it seems like the Chinese government is creating new hurdles for Team Green. In a report by The Information, it is revealed that major Chinese tech giants, such as ByteDance, Alibaba, and Tencent, are ordered by China’s authorities to suspend their purchases of the H20 AI chip, citing security concerns.
Interestingly, a similar report was discussed a few hours ago, but it was perceived that the scope was limited to 'guidance' by the Chinese regulators, and it wouldn't lead to a halt in purchases. However, the newer report claims that China's AI companies are required to suspend their orders of the H20 AI chip, which would create massive troubles for NVIDIA and Chinese companies in desperate need of computing power right now.
For those still unaware of why China is demanding local AI firms give up their pursuit of the H20 chip, the domestic administration is concerned about potential security backdoors that lead back to Washington. These include a location tracking mechanism and a 'kill switch' in case the end user doesn't come into America's good books. NVIDIA has denied the existence of such backdoors, claiming that it would never happen, but despite their claims, it seems like China still isn't satisfied.
One crucial point is that President Trump’s “AI Action” plan has a detailed section stating that all chips exported to China will have some backdoor, whether NVIDIA likes itor not. China had been fond of the H20 AI chip before the initial export controls came in, so the sudden change in stance does show that the domestic regulators are skeptical about the flow of the newer chips into the region.
About the author: Muhammad Zuhair is a hardware and technology reporter for Wccftech, specializing in the semiconductor industry and the complex interplay between technology, manufacturing, and geopolitics. His coverage focuses on the corporate strategies and technological roadmaps of industry giants like TSMC, NVIDIA, Samsung, and Intel. Zuhair's expertise lies in deconstructing complex topics such as fabrication nodes (e.g., 2nm process), the economic impact of policies like the CHIPS Act, and the strategic development of AI infrastructure from NVIDIA, AMD and Intel.
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