Nvidia CEO: H20 chip has no security backdoors, hopes China's response will be satisfactory.

Nvidia CEO: H20 chip has no security backdoors, hopes China's response will be satisfactory.

Nvidia (NVDA) has reportedly ordered a halt to the production of its H20 AI chip, designed specifically for the Chinese market, in response to recent directives from the Chinese government and U.S. export curbs. The decision comes after weeks of uncertainty surrounding the chip's compliance with security concerns and export regulations.

The tech giant has instructed some of its component suppliers to suspend work related to the H20 chip, according to sources cited by The Information [1]. The H20 chip was initially designed to comply with U.S. export restrictions, but recent Chinese government pressure has led to the current production halt. In April, the Trump administration banned H20 exports, and in June, President Trump reversed the ban after meeting with Nvidia CEO Jensen Huang at the White House. However, no actual export licenses were granted in the subsequent weeks.

On Aug. 11, President Trump confirmed that Nvidia and Advanced Micro Devices (AMD) had agreed to give 15% of their China chip revenue to the U.S. government in exchange for export licenses. Despite this agreement, the latest development suggests ongoing tensions between the companies and the Chinese government.

Nvidia stock was indicated down more than 1% on Robinhood overnight, with shares dipping 0.2% to 174.98 on Thursday, holding below the 21-day moving average. The stock has been testing its 10-week moving average in recent days. AMD stock also saw a slight decrease overnight, while Taiwan Semiconductor Manufacturing (TSM), which produces chips for Nvidia and AMD, saw little change.

Nvidia, a component of the Dow Jones, S&P 500, and Nasdaq, is set to report its fiscal Q2 earnings on Aug. 27. Historically, Nvidia’s stock has shown a mixed but generally positive trend around earnings releases: a 42.86% win rate over three days, 50.00% over 10 days, and 57.14% over 30 days post-announcement since 2022. While short-term volatility remains common, the data suggests a moderate to high likelihood of positive performance in the medium to long term following earnings reports. The company's CEO, Jensen Huang, has stated that the H20 chip has no security backdoors and expressed hope that the Chinese government's response will be satisfactory.



References:
[1] https://www.investors.com/news/technology/nvidia-halts-h20-production-beijing-directive-ai-chip/
[2] https://www.investors.com/uncategorized/nvidia-halts-h20-production-beijing-directive-ai-chip/