China Urges Firms Not To Use NVIDIA’s H20 AI Chips

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Following the Trump administration’s imposition of a 15% tariff on NVIDIA and AMD chip sales to China, sources cited by Bloomberg report that the Chinese government is wary about using American AI chips, particularly for security and governmental applications. While NVIDIA and AMD have received their export licenses for AI GPU chips, the Chinese government is concerned over potential backdoors or tracking mechanisms in NVIDIA’s products due to its dominant position in the AI chip market. Despite denials from NVIDIA, fears of dependency on foreign AI hardware are prompting the Chinese authorities to discourage firms from using these chips.

Chinese Government Urges Firms Not To Rely On NVIDIA’s H20 AI GPUs

The latest report builds upon earlier news that Chinese cybersecurity officials were investigating NVIDIA’s H20 AI chips for potential backdoors and location tracking mechanisms. Although NVIDIA only recently began selling the H20 GPUs in China, speculation about alternative routes such as Singapore and Malaysia led to concerns that the Trump administration might have requested NVIDIA to include tracking features to ensure reliable destination verification.

However, NVIDIA has strongly denied any claims of backdoors or tracking mechanisms being present. The company aims to resume its Chinese sales after receiving US export licenses earlier in the month. Nonetheless, despite these assurances, Chinese authorities remain skeptical about the firm’s chips.

According to Bloomberg, the Chinese authorities have sent letters to various firms urging them not to rely on NVIDIA’s H20 AI GPUs, especially for government or national security applications. While AMD’s AI accelerators are also under scrutiny, it is unclear whether this extends beyond specific chips like the MI308.

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October 8, 2025

The Chinese government’s concerns extend beyond security. They fear that reliance on foreign AI chips could stifle the domestic AI chip industry. The Chinese government encourages local firms to use domestically produced AI chips, with Huawei developing leading-edge AI chips despite US sanctions on chip manufacturing. However, NVIDIA’s performance and CUDA software remain superior.

📚 Reading Comprehension Quiz

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According to the passage, why is the Chinese government wary of using American AI chips for security and governmental applications?

A. Because there are concerns over potential backdoors or tracking mechanisms due to NVIDIA's dominant position in the market. B. Due to the high cost of these chips compared to domestic alternatives. C. Because the Chinese government has been denied export licenses for these chips. D. The Chinese government is not interested in AI technology.

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