The Chinese authorities have sent recommendations to several local companies to limit the use of certain types of semiconductors, including H20 chips from Nvidia. The letters received by state-owned enterprises and related private companies emphasize the undesirability of using these chips, although there is currently no official ban in place.
This is reported by Business • Media
Features of H20 Chips and Market Reaction
The H20 is the most powerful model from Nvidia that is allowed to be supplied to China under U.S. regulations. In early 2025, reports emerged about the White House’s plans to completely ban the export of these chips to the PRC in order to curb the development of the local artificial intelligence industry. However, in April, it became known that the Trump administration abandoned this idea after reaching agreements with Nvidia regarding investments in AI infrastructure development in the U.S.
Despite this, export restrictions remained in effect, resulting in significant financial losses for Nvidia in the first and second quarters of 2025. It was only in August that the export of H20 chips to China was officially permitted. At the same time, to obtain the necessary license, Nvidia and AMD must contribute up to 15% of their sales revenue in China to the U.S. Treasury.
Allegations of Backdoor Creation and Impact on Demand
Chinese regulators have expressed concerns regarding the H20 chips, accusing Nvidia of creating so-called backdoors in these semiconductors. According to government representatives, the identified loopholes allow for monitoring the operation of equipment and even remotely shutting it down. This, experts believe, was the basis for the new recommendations to limit the use of H20 in the public sector and related companies.
Despite the restrictions, the H20 remains a popular product in the Asian market. However, official Beijing continues to insist on a shift towards domestic developments. The letters also mention AMD, but without specifying particular chip models.
“The quality of chips from domestic manufacturers is significantly improving, but they may not be as versatile for the specific workloads that the Chinese AI industry aims to focus on.”
According to international media, some Chinese companies have already begun to reduce their purchases of H20 in response to the authorities’ recommendations. Despite this, some experts are convinced that the demand for Nvidia and AMD chips will remain substantial due to the specific needs of local IT sectors.