Nvidia looking to halt H20 chip production after China cracks down on purchases, reports say

Vcg | Visual China Group | Getty ImagesNvidia has asked some of its component suppliers to stop duction related to its made-for-China H20 general cessing units, as Beijing cracks down on the American chip darling, The Information reported Friday

The directive comes weeks after the Chinese government told local companies to stop buying the chips due to alleged security concerns, the report said, citing people with knowledge of the matter.Nvidia reportedly has asked Arizona-based Amkor nology, which handles the advanced packaging of the company's H20 chips, and South Korea's Samsung Electronics, which supplies memory for them, to halt duction

Samsung and Amkor did not immediately respond to CNBC's request for

A separate report from Reuters, citing sources, said that Nvidia had asked Foxconn to suspend work related to the H20s

Foxconn did not immediately respond to a request for .In response to an inquiry from CNBC, an Nvidia spokesperson said "We constantly manage our supply chain to address market conditions."The news further throws the return of the H20s to the China market in doubt, after Washington said it would issue export licenses, allowing the chip's exports to China — whose shipment had effectively been banned in April

Last month, the Cyberspace Administration of China had summoned Nvidia regarding national security concerns with the H20s and had asked the company to vide information on the chips

Beijing has raised concerns that the chips could be have certain tracking nology or "backdoors," allowing them to be operated remotely

U.S. lawmakers have posed legislation that would require AI chips under export regulations to be equipped with location-tracking systems to avoid their illegal shipments.watch now11:4411:44Access to Nvidia's H20 won't hand China an AI advantage: AnalystThe China ConnectionSpeaking to reporters in Taiwan on Friday, Nvidia CEO Jensen Huang acknowledged that China had asked questions security "backdoors," and that the company had made it they do not exist."Hopefully the response that we've given to the Chinese government will be sufficient

We're in discussions with them," he said, adding that Nvidia had been "surprised" by the queries."As you know, [Beijing] requested and urged us to secure licenses for the H20s, for some time and I've worked quite hard to help them secure the licenses, and so hopefully this will be resolved," he said.Nvidia in a statement on Friday said "The market can use the H20 with confidence."It added: "As both governments recognize, the H20 is not a military duct or for government infrastructure

China won't rely on American chips for government operations, just the U.S. government would not rely on chips from China

However, allowing U.S. chips for beneficial commercial use is good for everyone."Last month, China had reportedly sent notices to major companies and AI developers urging them against the use of the H20s, in what first had appeared as a soft mandate

The Information later reported that Beijing had told some firms, including ByteDance, Alibaba and Tencent, to halt orders of the chips altogether, until the completion of a national security review

It had been seen as a major win for Nvidia when Huang announced last month that the U.S. government would allow sales of the company's H20 chips to China

He had been lobbying against U.S. chip restrictions, which had impacted Nvidia's in the lucrative market.In his s on Friday, Huang also disclosed some of his discussions with U.S

President Donald Trump over the company's overseas , saying that he had "informed the president of the importance of the American AI stack.""You know, this is the beginning of a new industrial revolution, and during this time, AI developers, AI models, and AI applications supporting the American stack is very important," Huang said."I also explained that AI is going to advance around the world, with or without the United States, and it is important for us to maximize our AI export nology at a time when this industry is important," he added.Nvidia said it had taken a $4.5 billion writedown on its unsold H20 inventory in May, after exports restrictions kicked in, and said sales in its last financial quarter would have been $2.5 billion higher without any curbs.The national security scrutiny the H20s are now facing from the Chinese side, highlights the difficulties of navigating Nvidia's through increasing tensions and shifting trade policy between Washington and Beijing

Chip industry analysts have also said Beijing's actions appear to reinforce its commitment to its own chip self-sufficiency campaigns and its intention to resist the Trump administration's plan to keep American AI hardware dominant in China

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