Chip giant Nvidia has told some of its component suppliers to stop production of its H20 artificial intelligence chip, designed specifically for China, according to a report.
The move comes after Chinese authorities told local tech companies, including Tencent and ByteDance, to stop buying the semiconductors several weeks ago due to Beijing having alleged security concerns.
Nvidia told Arizona-based Amkor Technology to halt production of the H20 chips this week and also notified South Korea's Samsung Electronics, according to a report by The Information, which cited two people familiar with the matter.
The United States banned Nvidia from selling its most powerful chips, the Blackwell chip, to China in April, arguing it is necessary to safeguard US national and economic security as the AI global race gains pace.
In July, the Trump Administration reversed its decision on H20 chips, which is not Nvidia’s most powerful chip, largely due to trade negotiations between Washington and Beijing.
China’s Cyberspace Administration last month summoned Nvidia over national security concerns related to the H20s and asked the company to give information about the chips.
China’s internet regulator CAC claimed that US AI experts had said Nvidia’s chips have location tracking and can be shut down remotely. Nvidia denies the allegations.
Nvidia CEO Jensen Huang told reporters on Friday that China had asked about security “backdoors,” and that the firm had said they do not exist.
“Hopefully the response that we’ve given to the Chinese government will be sufficient. We’re in discussions with them,” CNBC quoted him as saying, adding that Nvidia had been “surprised” by the queries.
An Nvidia spokesperson said in a statement quoted by media that: "We constantly manage our supply chain to address market conditions".
"As both governments recognise, the H20 is not a military product or for government infrastructure. China won't rely on American chips for government operations, just like the US government would not rely on chips from China," it said.
'New product for China'
Huang also said on Friday that Nvidia is discussing a potential new computer chip designed for China with the Trump administration.
Huang was asked about a possible “B30A” semiconductor for AI data centres for China.
“I’m offering a new product to China for ... AI data centres, the follow-on to H20,” Huang said in Taiwan. But he added that "That’s not our decision to make. It’s up to, of course, the United States government. And we’re in dialogue with them, but it’s too soon to know”.
The Financial Times also reported this week that Chinese regulators turned against Nvidia due to “insulting” remarks made by the US Commerce Secretary Howard Lutnick.
“We don't sell them our best stuff, not our second-best stuff, not even our third-best,” Lutnick told CNBC in July.
However, it may take a few years for China to develop its own domestic AI chip that rivals Nvidia.
Nvidia is the world’s leading AI chip supplier. Chinese firms such as Alibaba and ByteDance have said their AI development would be hindered without Nvidia’s chips.
However, China is trying to promote chip sovereignty, and companies such as Huawei are trying to rival Nvidia.
