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Beijing is now concerned about the domestic industry’s reliance on American AI technology and is exploring alternative options. This concern has led to a regulatory investigation by China’s Cyberspace Administration, focusing on potential security issues in NVIDIA’s H20 AI accelerators. According to a Financial Times report, lawmakers are considering an ‘outright ban’ on the H20 AI chip, but this is not as straightforward as it seems.
The recent remarks by US Commerce Secretary Howard Lutnick, who suggested that Chinese developers should become “addicted” to American technology and acknowledged that China isn’t receiving the “best stuff,” have been seen as insulting. As a result, local tech leaders are encouraging domestic firms to reduce their reliance on NVIDIA’s H20 AI chips.
Many Chinese firms have reportedly reduced or canceled their orders for the H20 AI chip, indicating a growing resistance to adopting American AI technology. Domestic companies are increasingly favoring alternatives from Huawei and Cambricon, which are deemed adequate for inference workloads.
China aims to meet its AI computing needs through domestic solutions by next year once production lines scale up. However, for now, the region has no alternative but to rely on NVIDIA’s technology. A recent report detailed how DeepSeek’s R2 model was delayed due to the use of domestic AI chips, and later switched to NVIDIA’s technology stack, highlighting China’s current reliance on American chips for its AI advancements.
