Local Chinese businesses advised to steer clear of Nvidia's H20 processors, according to a report.
In a recent move, Chinese authorities have requested local companies to avoid using Nvidia's H20 chip for any government or national security-related work. This directive comes in response to concerns over national security and technological control.
The H20 chip, the most advanced artificial intelligence chip that Nvidia is currently allowed to sell in China, is a less-advanced chip compared to high-performance U.S. models. The chip was developed to comply with U.S. export controls by limiting its computational power and functionality, only being 15% of the high-end H100 chip. However, the Trump administration blocked its sale to China earlier in 2025, citing the need to safeguard U.S. national and economic security.
The renewed guidance from Chinese authorities affects chips beyond just Nvidia's H20 chip. Official notices were sent to a range of firms, discouraging the use of the H20 chip for any government or national security-related work. The move is an effort by China to control technological sovereignty and reduce reliance on foreign, potentially compromised hardware in government fields.
The U.S. government is set to receive 15% of revenue from sales of some advanced chips in China, as part of a deal with Nvidia and AMD. The deal, confirmed last week, is a significant shift in the ongoing strategic tension between the U.S. and China in advanced AI technology access.
Nvidia has stated that the H20 chip is "not a military product or for government infrastructure." The company also asserted that the chip does not contain any "backdoors" that would allow remote access or control. Despite this, China's Foreign Ministry expressed hope that the U.S. would take practical action to maintain the stability and smooth operation of the global chip supply chain.
The renewed guidance on avoiding chips also affects AI accelerators from AMD, although AMD did not respond to a request for comment outside regular business hours. Shares in China's top contract chipmaker SMIC rose 5% on Tuesday.
The Trump administration's decision to lift the ban on the sale of the H20 chip in China has been met with mixed reactions. U.S. President Donald Trump suggested on Monday that he might allow Nvidia to sell a scaled-down version of its advanced Blackwell chip in China. The move would potentially ease the ongoing tensions between the two nations.
However, the broader strategic tension around advanced AI technology access remains. The export limitations and recent political moves around these chips highlight the ongoing efforts by both nations to secure their technological advantages.
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In light of the Chinese authorities' directive, businesses should be cautious about using Nvidia's H20 chip in any finance-related tasks, given its potential connection to national security concerns and technological control issues. Additionally, the renewed guidance extends beyond Nvidia's H20 chip, potentially affecting other technology firms that produce advanced AI chips, such as AMD, in transactions related to government or national security work.
