Chinese Government Urges Local Companies To Avoid Nvidia H20 Chips

The Chinese government has warned domestic companies not to use Nvida's H20 chip (photo: dock. pexels)

JAKARTA - The CHINESE Authority is reportedly urging local companies not to use Nvidia's H20 chips, especially in government-related or national security projects. This move is expected to complicate Nvidia's efforts to increase its sales in the CHINA market, which has recently decreased.

According to a Bloomberg report citing related sources, various companies have received official notices suggesting that H20 chips, which are less sophisticated versions, are not used for jobs involving government agencies or state security, either by state-owned or private companies.

In a statement on Tuesday, August 12, Nvidia confirmed that the H20 chip is not a military product or for government infrastructure. The company also added that China has sufficient domestic chip supply to meet its needs and has never relied on American chips for government operations, as the US government will also not rely on chips from China.

Last month, Washington lifted the ban on selling H20 chips to China, making it now the most advanced artificial intelligence chip Nvidia has allowed to market in the country. However, the move comes amid a Chinese state media report voicing security concerns over the H20 chip. Nvidia denies any backdoor' that allows remote access or control.

The Financial Times also reports that Beijing is also putting pressure on Chinese tech giants such as Alibaba and ByteDance to explain why they ordered H20 chips instead of using domestic alternatives. Some companies are said to be considering reducing their orders due to questions from regulators.

China continues to encourage the use of domestic technology, including Huawei's AI chip, which is Nvidia's main competitor in the artificial intelligence chip market. China's largest contract chipmaker SMIC stock rose 5% on Tuesday as expectations increased demand for local chips.

The informal ban on the H20 chip comes a day after US President Donald Trump stated the possibility of allowing the sale of a "scaled-down" version of Nvidia's advanced Blackwell chip to China, despite concerns in Washington that US AI technology could be used by Beijing to strengthen its military.

The Trump government last week also confirmed a historic agreement with Nvidia and AMD, requiring the two companies to provide 15% revenue from the sale of several advanced chips in China to the US government.

Bloomberg added that China's appeal to evade foreign chips also includes AI accelerators from AMD, such as MI308, although it is not yet clear whether the official notification mentions AMD specifically. AMD has not commented on this report.