China urges firms to avoid Nvidia H20 chips in government, security sectors
Chinese authorities have urged local companies to avoid using Nvidia’s NVDA.O H20 chips, particularly for government-related purposes, Bloomberg News reported on Tuesday.
Over the past few weeks, Chinese authorities have sent notices to a range of firms discouraging use of the less-advanced semiconductors, people familiar with the matter said, adding that the guidance was particularly strong against the use of H20s for any government or national security-related work by state enterprises or private companies.
Industry analysts broadly agree that Chinese companies still covet those chips, which perform quite well in certain crucial AI applications, Bloomberg added.
Nvidia said in a statement on Tuesday that the H20 chip was “not a military product or for government infrastructure.”
“China has ample supply of domestic chips to meet its needs. It won’t and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China,” the statement said.
The move comes after reports in China’s state media of security concerns around H20 chips. Nvidia has said there are no “backdoors” that would allow remote access or control.
According to the Financial Times, Beijing is pressuring China’s large tech firms such as Alibaba 9988.HK and ByteDance over orders of H20 chips.
The companies have been asked by the Ministry of Industry and Information Technology to explain why they need to order H20 chips instead of using domestic alternatives, FT report said, citing people familiar with the matter.
China is also trying to promote the use of domestically-developed technologies including AI chips made by Huawei, the Chinese rival with which Nvidia is battling for AI chip dominance.
Shares in China’s top contract chipmaker SMIC 0981.HK rose 5% on Tuesday on expectations of rising demand for locally-produced chips.
