China orders companies to halt NVIDIA chip orders, order applies to Bytedance, Alibaba, others - The Information.

China orders companies to halt NVIDIA chip orders, order applies to Bytedance, Alibaba, others - The Information.

In a move that has significant implications for the tech industry, Chinese authorities have directed local firms to cease orders for NVIDIA's H20 processors, particularly for government-related purposes [1]. This directive, reported by Bloomberg News, has targeted major tech companies such as ByteDance and Alibaba, aiming to reduce reliance on foreign semiconductor technology.

The directive, which has been communicated through notices to various firms, discourages the use of NVIDIA's H20 chips in any government or national security-related work. The guidance emphasizes the adoption of domestic alternatives from companies like Huawei and Cambricon. This push comes amid heightened security concerns over NVIDIA's products and escalating U.S.-China tensions in the realm of AI technology [2].

NVIDIA, in response to these concerns, has maintained that its products do not contain "backdoors" that would allow remote access or control [1]. Despite this, the company has faced restrictions on its advanced chips, including the H20, which is based on the older Hopper architecture platform. The Trump administration had previously approved the export of H20 AI chips to China, but the latest directive indicates a shift in policy.

The impact of this directive on NVIDIA's market share in China is substantial. Bernstein analysts project that NVIDIA's market share in China could fall from 66% in 2024 to 55% this year. Additionally, NVIDIA reported a $4.5 billion charge in the first quarter due to excess H20 inventory and purchase obligations [2].

Analysts have noted that the potential revenue for NVIDIA from additional H20 GPU shipments, if approved by U.S. regulators, could range from $6 billion to $10 billion between August and January. This estimate is based on NVIDIA's reported order of 300,000 more H20 units from Taiwan Semiconductor Manufacturing Co. [2].

The directive from Chinese authorities underscores the ongoing geopolitical tensions surrounding semiconductor technology and AI advancements. As these tensions persist, tech companies operating in China will need to adapt their strategies to comply with local regulations and maintain their market positions.

References:
[1] Reuters. (2025, August 12). China urges local firms not to use Nvidia's H20 chips - Bloomberg News reports. Retrieved from https://www.reuters.com/world/china/china-urges-local-firms-not-use-nvidias-h20-chips-bloomberg-news-reports-2025-08-12/
[2] Benzinga. (2025, August 25). Beijing asks Alibaba, ByteDance why they need Nvidia H20 chips instead of local alternatives. Retrieved from https://www.benzinga.com/markets/tech/25/08/47057250/beijing-asks-alibaba-bytedance-why-they-need-nvidia-h20-chips-instead-of-local-alternatives