Nvidia Asks Suppliers to Stop H20 Chip Production Amid Pressure from Beijing

Nvidia has asked suppliers, including Samsung and Amkor, to halt work on the H20 AI chip, according to The Information. The request comes after Beijing urged local companies to avoid using the chip. Nvidia and AMD recently secured US approval to resume lower-end AI chip sales to China, but face the challenge of Chinese customers being pressured to buy domestic chips instead.

Nvidia Corporation has instructed component suppliers, including Samsung Electronics and Amkor Technology, to suspend production related to its H20 AI chip. This directive follows Beijing's urging of local companies to avoid using the chip, according to The Information [3].

Nvidia and AMD recently secured U.S. approval to resume sales of lower-end AI chips to China, but face significant challenges. Chinese customers are being pressured to opt for domestic chips instead, which has led to Nvidia's latest production halt.

The H20 chip, designed to maintain Nvidia's access to the Chinese market under stringent U.S. export controls, has been deemed a security risk by Beijing. The Chinese government has summoned Nvidia for explanations and discouraged its companies from using the chip, citing potential security risks such as "tracking and positioning" and "remote shutdown" features [2].

Nvidia's CEO Jensen Huang has argued that the U.S. should accelerate the diffusion of American AI technology globally, stating that China is "very, very close" to the U.S. in semiconductor technology [2]. Despite this, China continues to develop its own chip industry to reduce reliance on foreign technology.

The H20 chip's appeal lies in its integration with Nvidia's software platform, which offers a "moat" of compatibility and ease of integration for AI developers. However, Chinese tech giants like Huawei are making strides in AI chip technology, with Huawei's top AI chips excelling in computing power but lagging in memory bandwidth [2].

As China pushes for self-sufficiency in semiconductors, the percentage of homemade AI chips in the country is projected to surge from 17% in 2023 to 55% by 2027, while American suppliers like Nvidia and AMD will shrink to 45% from 83% [2].

References:
[1] https://www.reuters.com/world/china/nvidia-orders-halt-h20-chip-production-after-china-directive-information-says-2025-08-22/
[2] https://www.cnn.com/2025/08/17/tech/nvidia-china-beijing-trump-ai-intl-hnk
[3] https://www.bloomberg.com/news/articles/2025-08-22/nvidia-asks-suppliers-to-halt-work-on-h20-chip-information-says