Nvidia advised component suppliers like Samsung and Amkor Technology to halt production of the H20 artificial intelligence chip, as reported by The Information based on anonymous sources.
Nvidia reportedly responded to a request from Beijing to stop using a chip tailored for the Chinese market, leading to a 1.3% drop in the company’s pre-market trading.
A halt in production could cause concerns about the essential need for H20, a weaker alternative to Nvidia’s cutting-edge AI accelerators, in competition with similar chips from Huawei Technologies and Cambricon Technologies, whose actions boosted other Chinese chip manufacturers’ stocks.
Nvidia facing challenges
Nvidia and Advanced Micro Devices have been given permission by Washington to restart selling lower-performance AI chips to China, with the requirement of handing over 15% of the revenue to the U.S. government.
Chinese consumers of these companies are facing pressure to use domestically manufactured chips as part of an effort to enhance the national industry and reduce reliance on American technology.
Chinese officials have been advising companies to avoid using outdated semiconductors following concerns about security risks and discussions about improving location tracking technology in chips.
The examination aligns with the enhancement of the capabilities of domestic alternatives to Nvidia, developed by Huawei and its competitors. DeepSeek, a Chinese AI company, announced on Thursday that its newest AI model was tailored to operate with cutting-edge AI chips made in China, without providing further specifics.
CEO Jensen Huang was taken aback by Beijing’s concerns and is now engaging in discussions with authorities. He emphasized that the H20 does not contain security vulnerabilities. Huang, currently in Taiwan to discuss the next chip, Rubin, with Taiwan Semiconductor Manufacturing, mentioned that Nvidia is also in talks with Washington regarding a potential successor to the H20 for China, pending decisions by the Trump administration.
Creating a new product for AI data centers in China, similar to H20, is not our choice. It ultimately depends on the U.S. government, as mentioned by Huang in an impromptu airport briefing. Discussions are ongoing, but it is too soon to determine the outcome.
