China warns against Nvidia's H20 chip use in government-related projects, reports Bloomberg

China has urged local companies to avoid using Nvidia's H20 processors, particularly for government-related purposes, according to Bloomberg. Authorities have sent notices to various firms discouraging the use of the less-advanced semiconductors over the past few weeks. The move is likely a response to concerns over the security of foreign-made technology and the need for domestic alternatives.

Title: China Urges Firms to Avoid Nvidia H20 Processors for Government Work

China has formally urged local companies to avoid using Nvidia's H20 AI processors, particularly for government or security-related projects, according to Bloomberg. The move is likely a response to concerns over the security of foreign-made technology and the need for domestic alternatives [1].

Over the past few weeks, Chinese authorities have sent notices to various firms discouraging the use of the less-advanced semiconductors. The guidance was particularly strong against the use of H20s for any government or national security-related work by state enterprises or private companies [2].

The H20, a variant based on Nvidia's older Hopper architecture, was permitted for export under U.S. controls. However, China's push reflects caution regarding potential backdoors or vulnerabilities, despite Nvidia's assurances there are none [3].

This guidance appears to be another facet of Beijing's broader campaign to strengthen its semiconductor industry. Chinese agencies are encouraging companies to favor homegrown solutions over foreign chips like the H20. Reports suggest companies received direct inquiries asking why they choose Nvidia's chips over domestic alternatives, whether security concerns influenced their choice, and if domestic chips could meet their needs instead [3].

The move comes as the Trump administration reversed an effective US ban on Nvidia's H20 AI chip sales to China. Nvidia and AMD have secured Washington's approval to resume lower-end AI chip sales to China, on the controversial and legally questionable condition that they give the US government a 15% cut of the related revenue [2].

Nvidia and AMD face the challenge that their Chinese customers are under Beijing’s pressure to purchase domestic chips instead. Beijing’s overall push affects AI accelerators from AMD in addition to Nvidia [2].

Chinese companies may not be ready to jump ship to local semiconductors. "Chips from domestic manufacturers are improving dramatically in quality, but they might not be as versatile for specific workloads that China’s domestic AI industry hopes to focus on," said Homin Lee, a senior macro strategist at Lombard Odier in Singapore [2].

Beijing’s stance could limit Trump’s ability to turn his export control about-face into a windfall for government coffers, a deal that highlighted his administration’s transactional approach to national security policies long treated as non-negotiable [2].

References:
[1] https://www.reuters.com/world/china/china-urges-local-firms-not-use-nvidias-h20-chips-bloomberg-news-reports-2025-08-12/
[2] https://www.gulf-times.com/article/708825/business/china-urges-firms-to-avoid-nvidia-h20-chips-after-trump-resumes-sales
[3] https://voice.lapaas.com/china-urges-firms-not-to-use-nvidia-h20-chips/