lucadelladora – NVIDIA has reportedly instructed its suppliers to halt production of the H20 AI chips intended for the Chinese market. According to The Information, the company directed Amkor Technology, Samsung Electronics, and Foxconn to pause work related to the H20. Amkor, based in Arizona, handles advanced packaging for the chip, while Samsung supplies memory components. Foxconn manages backend processing.
When approached for comment, NVIDIA told CNBC that it “constantly manages [its] supply chain to address market conditions,” declining to confirm the specific reason behind the production pause. This decision comes just months after the United States government blocked sales of the H20 chips to China in April due to national security concerns. Authorities feared that China could use the chips to enhance military-focused AI technologies.
In July, NVIDIA resumed shipments after it reportedly struck a deal to retain 15 percent of H20 sales revenue. However, domestic regulators instructed Chinese tech firms like ByteDance and Alibaba to halt new orders. The Cyberspace Administration of China raised concerns about the chips’ remote traceability, suggesting foreign entities could monitor or control them.
NVIDIA CEO Jensen Huang publicly addressed the claims, stating Chinese regulators had questioned the existence of a potential “backdoor.” Huang clarified that no such vulnerability exists and expressed hope that the company’s response would satisfy authorities.
Diplomatic Tensions and Market Resistance Impact NVIDIA’s AI Chip Strategy in China
While technical concerns were the initial reason behind China’s reluctance to adopt the H20 chip. Diplomatic tensions have since added another layer of complexity. A Financial Times report revealed that Chinese officials were further angered by comments made by U.S. commerce secretary Howard Lutnick.
Lutnick, during an interview, downplayed the performance of the H20 chip, describing it as “the fourth one down.” He stated the goal was to sell China just enough to “get addicted to the American technology stack,” remarks Chinese authorities allegedly found offensive and disrespectful.
These comments appear to have reinforced China’s hesitation toward the H20, despite its status as the most advanced AI chip currently available to them from NVIDIA. Even though sales technically resumed, market resistance and geopolitical friction have made the H20’s future in China uncertain.
Read More : Huawei Unveils Kirin 9020, Ending Flagship Chip Silence
In response, NVIDIA is reportedly working on a new chip designed for the Chinese market. According to Reuters, it will be based on the company’s latest Blackwell architecture and offer roughly half the computing power of the Blackwell Ultra GPUs. This chip aims to comply with export restrictions while still offering significant AI performance.
The pause in H20 production signals how international politics, national security concerns, and market perception can directly influence the global AI supply chain. As NVIDIA adapts its strategy, the tech world will watch closely to see how it navigates regulatory scrutiny and maintains competitiveness in China’s massive AI market.
