NVIDIA has reportedly stopped production of its H20 AI chips after Chinese regulators issued warnings to local companies regarding their use.
According to The Information, NVIDIA has instructed its suppliers to halt production of H20 AI chips for the Chinese market. Arizona-based Amkor Technology Inc. and Samsung Electronics have been asked by the company itself to discontinue manufacturing processes on the H20. Amkor processes the chips in advanced packaging, with Samsung providing the memory to NVIDIA. Reuters also stated that NVIDIA has told Foxconn, though tasked with backend processing of the chip, to cease working on it.
When asked to comment on the alleged production halt, NVIDIA told CNBC in a statement:
“We continuously manage our supply chain based on market conditions.”
Back in April, the U.S. government banned NVIDIA from selling the H20 in China, fearing the chip could be used by China to develop military-grade AI technologies. However, NVIDIA was later allowed to resume sales in July after reportedly agreeing to a deal that would give the U.S. a 15% share of the revenue from those sales.
Despite the approval, the H20 chip hasn’t received a warm welcome in China. The local government was reported to have instructed major Chinese tech firms, such as ByteDance and Alibaba, to halt placing new orders for the chip due to security concerns. China’s Cyberspace Administration even held discussions with NVIDIA, claiming AI experts had found that the chips could potentially be remotely tracked and controlled.
Jensen Huang, NVIDIA’s CEO, told analysts in a video conference that Chinese officials have inquired about rumors of a security backdoor in NVIDIA’s chips. He responded by clarifying that no such backdoor exists, saying:
“Hopefully, the answers we’ve provided to the Chinese government are sufficient.”
However, a recent Financial Times report suggests that the issue goes beyond just security concerns. Reportedly, Chinese officials were also offended by comments made by U.S. Commerce Secretary Howard Lutnick. After the U.S. allowed shipments of the H20 to China again, Lutnick stated in an interview:
“We don’t sell them our best product, or our second-best, or even our third-best. After the fourth-tier product is done, we want China to keep using it… You want to sell them just enough that their developers get hooked on American infrastructure.”
Currently, the H20 is the most advanced AI chip that NVIDIA is selling in the Chinese market. However, reports suggest that the company is working on an even more powerful product. Reuters previously reported that it will be based on NVIDIA’s Blackwell architecture and will offer about half the computing power of its flagship Blackwell Ultra GPU.
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