Nvidia may have the Trump administration’s blessing to resume shipments of its H20 AI accelerators to China, but in Beijing, government officials are now pressuring companies to use what they describe as less-advanced semiconductors.
According to a Bloomberg report citing unnamed persons familiar with the matter, Chinese authorities have sent letters to several firms discouraging the use of Nvidia’s H20 GPUs for AI applications, particularly by those involved in government or national security-related work.
In April, the US Commerce Department halted sales of Nvidia’s H20 — essentially a nerfed version of the company’s more powerful H200 GPUs with reduced floating point performance and interconnect bandwidth. AMD’s own China-spec GPU, the MI308, also saw a temporary block.
However, by July, Nvidia and AMD revealed that they’d reached a deal with the US government to resume shipments of the accelerators. This deal, it was revealed this week, involved cutting Uncle Sam a check for 15 percent of H20 and MI308 revenues.
Trump, on Monday, also suggested that Nvidia could convince him to allow shipments of a Blackwell-based accelerator in China if its performance was “negatively” enhanced by something like 30-50 percent.
However, since announcing plans to resume H20 shipments in July, the chip has become a source of controversy as the Chinese government has raised concerns over the potential inclusion of location tracking tech, backdoors, and remote kill switches. Nvidia has denied these allegations.
But while Nvidia denies the existence of any such capability today, it could be required to add such features in the future. Legislation that would mandate the inclusion of location verification tech is already gaining traction among lawmakers in the US House and Senate.
Nvidia CEO Jensen Huang has previously dismissed the idea that Chinese military or government supercomputers would use its chips. In an interview with CNN’s Fareed Zakaria earlier this summer, Huang argued that the Chinese military won’t use his chips for the same reason that Uncle Sam wouldn’t conceive of using theirs.
It’s also worth noting that US government’s end use rules already prohibit China from deploying advanced semiconductors in its military supercomputers, though enforcing those rules once the chips are outside regulators’ control remains a challenge.
“The H20 is not a military product or for government infrastructure. China has an 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 US government would not rely on chips from China,” Nvidia said in a statement to the media. “Banning the sale of H20 in China would only harm US economic and technology leadership with zero national security benefit.”
The letters Chinese authorities allegedly sent seem to reinforce this argument as they recommend avoiding the H20 for government or national security applications.
As such, the letters may have less to do with encouraging the use of more sophisticated domestic accelerators like Huawei’s CloudMatrix rack systems, which we’ve previously explored in depth, and more to do with convincing the US not to reinstate a sales ban or pursue kill switch mandates. ®