China Urges Tech Giants To Avoid Nvidia H20 Chips After Trump Lifts Sales Ban

Beijing is quietly discouraging Chinese firms, particularly those tied to state and/or national security interests, from using Nvidia’s H20 AI chips, even after the Trump administration reversed a U.S. sales ban in exchange for 15% of related revenue. The move follows Beijing’s concerns over a potential “backdoor” in the H20, an allegation Nvidia CEO Jensen Huang has rejected.

The report comes from the Financial Times, which states that regulators at the Ministry of Industry and Information Technology (MIIT) instructed tech companies, such as Alibaba and ByteDance, to explain why they need H20 chips instead of sourcing domestic alternatives. 

“It’s not banned but has kind of become a politically incorrect thing to do,” said one Chinese data center operator about purchasing H20 chips. 

In a separate report, Bloomberg said that Chinese authorities had sent notices to multiple tech firms, urging against the use of the H20 chips, especially in government-related work. 

Sources familiar with the letter said Beijing has not imposed an outright ban on the use of H20 chips. Still, many industry analysts note that Chinese tech firms continue to favor the H20 for AI applications. On Monday, President Trump described the chip as “obsolete” but acknowledged it “still has a market” in the world’s second-largest economy.

Bloomberg noted, “Beijing’s stance could limit Trump’s ability to turn his export control about-face into a windfall for government coffers, a deal that highlighted his administration’s transactional approach to national security policies long treated as non-negotiable.” 

Nvidia told Reuters on Tuesday that the H20 chip was “not a military product or for government infrastructure.”

“China has an ample supply of domestic chips to meet its needs. It won’t and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China,” the statement said.

In short, China is restricting the use of U.S. AI chips in sensitive areas while promoting domestic suppliers, mirroring the identical approach the U.S. has taken toward Huawei.