china rethinks nvidia h20 chips amid security concerns

2025-08-14 nvidia

Beijing, Thursday, 14 August 2025.
the chinese government is reportedly urging local firms to limit their use of nvidia’s h20 ai chips. the decision follows security concerns raised by the ministry of industry and information technology after discussions with tencent and bytedance. despite nvidia’s claim that the h20 is not for military or government use, china is proceeding with caution. this could significantly impact nvidia’s market share, especially as china emphasizes self-reliance in chip technology and considers alternatives like huawei.

Nvidia’s response and market context

Nvidia has responded by stating that the H20 chip is neither a military product nor intended for government infrastructure [1][2]. Despite this, the Cyberspace Administration of China (CAC) and other agencies have engaged with tech firms like Baidu, Tencent, and ByteDance to discuss concerns over information risks associated with the H20 [3]. Nvidia designed the H20 specifically for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023 [1][3]. In its fiscal year ending January 26, Nvidia reported $17 billion in sales from China, representing 13% of its total revenue [3].

China’s push for self-reliance

China’s actions reflect a broader strategy to reduce reliance on foreign chips and bolster domestic technology [1][2]. Taiwan’s DSET researcher, Jiang Minyan, suggests that China aims to ensure sufficient domestic demand to support the advancement of local companies like Huawei [2]. This initiative aligns with China’s goal of achieving self-sufficiency in critical technologies and ensuring data security [5]. The U.S. government’s strategy of embedding tracking devices in AI chip shipments to China further complicates the situation, raising concerns about monitoring and control [2].

Trump’s involvement and potential blackwell sales

Amid these developments, U.S. President Donald Trump has suggested he might allow Nvidia to sell a scaled-down version of its advanced Blackwell chip in China [3]. The computing power of the Blackwel chip is reportedly 30% to 50% lower than the standard version but faster than the H20 [1][2]. Trump defended a deal allowing Nvidia and AMD to resume selling certain high-performance semiconductors to China, with the U.S. government receiving 15% of the sales revenue [7]. However, some U.S. lawmakers have criticized this approach, expressing concerns about enabling China’s access to advanced AI technologies [7].

Analyst perspectives and market impact

Analysts are closely monitoring the implications of China’s shift away from Nvidia’s H20 chips [1]. One industry expert noted that this move could significantly impact Nvidia’s market share in China [1]. A market research analyst emphasized that China’s focus on self-reliance in chip technology is accelerating [1]. China’s foreign ministry has expressed hope that the U.S. will take practical actions to maintain the stability and smooth operation of the global chip supply chain [1][3]. The situation remains fluid, with potential shifts in policy and ongoing assessments of security risks influencing market dynamics [5].

Bronnen

china chips nvidia h20