China has offered a muted response to President Donald Trump’s decision to allow Nvidia to resume sales of its H20 AI chip in the country, balancing security concerns with ongoing demand as it pushes for semiconductor self-sufficiency. According to CNN, authorities called the H20 a security risk, summoned Nvidia for explanations, and urged local firms to avoid using the chip.
Policy reversal meets cautious reception
The H20 was designed to comply with US export controls introduced under the Biden administration that barred high-performance chips. Trump greenlit its sale last month after previously banning it in April, calling the chip “obsolete” compared with Nvidia’s most advanced processors. CNN reports that Chinese regulators warned about alleged “tracking and positioning” and “remote shutdown” features—capabilities Nvidia denies. China’s cyberspace watchdog and industry ministry met with the company, and guidance discouraging H20 use was reported by Bloomberg, CNN noted.
While Beijing has long sought relief from US restrictions, the reserved reaction underscores its strategic push to build a domestic chip supply chain. Xiang Ligang, an advisor to China’s Ministry of Industry and Information Technology, told CNN that the reversal reinforces the need to rely on homegrown chips for secure supply. He questioned US intentions, arguing that advanced processors remain blocked while older products enter China’s market.
Security concerns versus ecosystem advantage
Nvidia told CNN it does not include backdoors in its chips and argued that blocking H20 sales would harm US leadership without benefiting national security. Analysts cited by CNN said Huawei’s AI chips rival or surpass the H20 in computing power but lag in memory bandwidth, which depends on High Bandwidth Memory (HBM). China’s leading HBM producer CXMT trails global leaders by several years, and tightened US controls on HBM have forced reliance on stockpiles.
Demand persists amid domestic drive
Despite concerns and lower performance, CNN reported that H20 demand remains strong among Chinese tech firms due to Nvidia’s mature software-hardware ecosystem and Huawei’s limited production capacity. Bernstein estimated that, absent restrictions, China shipments could have reached 1.5 million H20 units this year, with buyers including ByteDance, Alibaba, and Tencent. Supply bottlenecks also stem from constraints in advanced packaging and scaling production, analysts said.
China’s share of domestically made AI chips is projected by Bernstein to rise sharply in coming years, even as American suppliers’ share declines. Nvidia CEO Jensen Huang has acknowledged Huawei’s progress and urged loosening of export controls, with CNN quoting him as saying China is “very, very close.”
