China questions Nvidia chip purchases during security concerns

Chinese authorities have summoned major tech firms, including Tencent and ByteDance, over their purchases of Nvidia’s H20 AI chips, raising concerns about information security and urging companies to rely on domestic suppliers amid escalating regulatory scrutiny.

Officials expressed concern that materials Nvidia submitted for U.S. government review could contain sensitive data, including client information.

Despite these concerns, companies have not been ordered to halt purchases of the H20 chip. 

Nvidia said on Tuesday the H20 chip was 'not a military product or for government infrastructure'.

"China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China," the statement said.

Following reports that Chinese authorities urged firms to avoid Nvidia’s H20 chips for government use, while state media criticized the chip’s security and technology.

This pressure puts Nvidia’s China market—13% of its revenue at risk. China is fast-tracking domestic AI chips like Huawei’s alternatives to the H20, but U.S. sanctions limit its production capabilities.

The Trump administration recently eased export restrictions on the H20 chip, permitting its sale in China with conditions, and struck a deal with Nvidia and AMD to share revenue from advanced chip sales.

Meanwhile, China’s foreign ministry urged chip supply chain stability as U.S. officials express concerns over AI chips potentially boosting China’s military.

Copied