China urges firms to avoid Nvidia’s H20

Beijing says the chip poses security risks

- MACKENZIE HAWKINS IAN KING

China has urged local companies to avoid using Nvidia Corp's H20 processors, particularly for government-related purposes, complicating the chipmaker’s attempts to recoup billions in lost China revenue as well as the Trump administration's unprecedented push to turn those sales into a US government windfall.

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, asking not to be named discussing sensitive information. The guidance was particularly strong against the use of H20s for any government or national security-related work by state enterprises or private companies, the people said.

In addition to Nvidia, Beijing’s guidance affects AI accelerators from Advanced Micro Devices Inc, one of the people said, though it’s unclear whether any letters specifically mentioned AMD's MI308 chip. Both companies recently secured Washington's approval to resume lower-end Al chip sales to China, on the controversial and legally questionable condition that they give the US government a 15% cut of the related revenue. Now, Nvidia and AMD face the challenge that their Chinese customers are under Beijing's pressure not to make those purchases.

Some of Beijing's letters to companies included a series of questions, according to one of the people, such as why they buy Nvidia H20 chips over local alternatives, whether that's a necessary choice given domestic options, and whether they've found any security issues in the Nvidia hardware. The notices coincide with state media reports that cast doubt on the security and reliability of H20 processors. Chinese regulators have raised those concerns directly with Nvidia, which has repeatedly denied that its chips contain such vulnerabilities.