Caught in the Crossfire: NVIDIA Halts H20 Chip Production Amid U.S.-China Tensions
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According to information obtained by The Information, Amkor Technology, the company responsible for the advanced packaging of NVIDIA’s H20 AI chips, along with Samsung, which supplies the memory components, have halted related processes under NVIDIA’s directive. Reuters further reported that Foxconn, tasked with subsequent assembly, has likewise been instructed to suspend operations.
As early as April, the U.S. government restricted the export of H20 AI chips to China on the grounds that they could “potentially be used to advance China’s military AI capabilities.” This move prompted criticism from NVIDIA’s CEO, Jensen Huang. However, in July, Washington reached an agreement with NVIDIA, allowing the company to resume sales of H20 chips in China—on the condition that 15% of its revenue from these sales be remitted to the U.S. government.
On the other side, China’s regulators, including the Cyberspace Administration of China (CAC), instructed major tech firms such as ByteDance and Alibaba to halt orders for the H20, citing security concerns over alleged backdoors.
Chinese regulators claimed that experts had raised alarms suggesting the H20 could be susceptible to remote tracking or remote control. In response, Jensen Huang, speaking from Taiwan, refuted the allegations, stressing that the chip contained no such backdoors, while confirming ongoing discussions with Beijing in an effort to ease tensions.
Yet, a report by the Financial Times suggested that China’s resistance is not purely technical but also deeply political. When the U.S. government authorized NVIDIA to resume shipments of the H20, U.S. Commerce Secretary Howard Lutnick remarked in an interview that America would not sell China its best technology—“not even the second or third best, but the fourth-tier products”—intending to ensure that Chinese developers remain dependent on U.S. technological stacks. This statement, reportedly perceived by Beijing as “an insult”, intensified China’s hostility toward the H20.
The H20 was originally designed as NVIDIA’s tailored solution for the Chinese market, but escalating regulatory scrutiny and political frictions now cast serious doubt on its viability. NVIDIA is already said to be working on an alternative chip based on the Blackwell architecture, which, despite offering only half the computing power of the Blackwell Ultra GPU, is expected to serve as a key option for the Chinese market.
For NVIDIA, the tug-of-war between Washington and Beijing underscores the growing difficulty of navigating its China strategy. The suspension of H20 production is not merely a supply chain adjustment, but rather a stark illustration of how AI technology has become a central battlefield in global politics and industrial rivalry.
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