Nvidia Accused of Creating Backdoor in H20 AI Chips by Chinese Regulators

China's Cyberspace Administration has accused Nvidia of creating "backdoors" in its H20 AI chips, allowing devices to be tracked and remotely disabled. The claims are based on unspecified security concerns and have yet to be supported by concrete facts. Nvidia has not commented on the allegations. The move jeopardizes Nvidia's plans to rebuild its business in China and comes amid pressure on chipmakers in the US to build tracking systems into exported processors.

Nvidia's (NVDA) recent struggle with the Chinese market has escalated as the Cyberspace Administration of China (CAC) raised concerns about potential backdoors in the company's H20 AI chips. The regulator summoned Nvidia to explain the "backdoor security risks" associated with the H20 chips, citing unspecified security concerns [1].

The CAC's move comes amidst growing pressure on U.S. chipmakers to equip exported processors with tracking and positioning technologies. U.S. lawmakers have proposed such measures, although no formal rules have been established [3]. Nvidia, which had been banned from selling the H20 chip to China in April, received a green light to resume sales in July [1].

Nvidia has maintained that its chips do not contain backdoors that would allow remote access or control. A spokesperson for the company stated, "Cybersecurity is critically important to us. Nvidia does not have 'backdoors' in our chips that would give anyone a remote way to access or control them" [1]. However, the CAC's allegations have cast uncertainty over Nvidia's sales prospects in China.

The regulator's concerns are part of a broader trend where Chinese authorities have accused U.S. tech companies of posing security risks. In early 2023, China barred key operators from purchasing from Micron due to security concerns, and last year, the Cybersecurity Association of China called for Intel products sold in China to be subject to a security review [3].

Nvidia's products are highly sought after in China, with strong demand from tech companies, military bodies, state-run AI research institutes, and universities. The company recently placed an order with contract manufacturer Taiwan Semiconductor (TSM) for 300,000 H20 chipsets to meet Chinese demand [2].

While the CAC's move may be a symbolic stance against U.S. authorities' concerns, analysts believe that China will not introduce regulatory hurdles that will effectively drive Nvidia out of the market due to the lack of alternatives [3]. Nvidia's CEO Jensen Huang has been actively engaging with Chinese officials to demonstrate the company's commitment to the Chinese market [3].

References:
[1] https://www.morningstar.com/news/marketwatch/20250731182/nvidia-got-us-greenlight-to-sell-its-h20-chips-in-china-but-now-china-is-worried-about-security
[2] https://www.businesstoday.com.my/2025/07/31/chinas-cyberspace-agency-summons-nvidia-over-h20-ai-chip-security-risks/
[3] https://economictimes.indiatimes.com/tech/technology/nvidia-says-its-chips-have-no-backdoors-after-china-flags-h20-security-concerns/articleshow/123025317.cms?from=mdr