China warns Nvidia over H20 chip security amid US tech rivalry

China has raised security concerns regarding Nvidia’s H20 artificial intelligence chips, specifically citing potential “backdoor security risks” and tracking functionalities. The move by China’s Cyberspace Administration (CAC) involved summoning Nvidia for discussions, following recent U.S. proposals to mandate tracking and positioning features in exported chips.

According to Tilly Zhang of Gavekal Dragonomics, this signals a shift in China’s technological independence. “Nvidia chips are now dispensable for China. They can be easily put on the negotiating table,” Zhang stated, adding that China demonstrates “more courage and domestic substitution capabilities compared to previous years to not rely on overseas technology.”

However, Charlie Chai of 86Research offered a more nuanced perspective. While acknowledging Beijing’s stance, Chai suggested, “we do not believe Beijing will make excessively harsh demands or introduce regulatory hurdles that will effectively drive Nvidia out of China – for the lack of alternatives China still needs Nvidia chips for domestic research and applications.” He characterized Beijing’s warning as “most likely a symbolic stance against similar objections made by U.S. authorities.”

The warning from Beijing comes just weeks after Nvidia CEO Jensen Huang’s recent visit to China, during which he praised the country’s advancements in AI. Despite the escalating tensions, Nvidia recently placed an order for 300,000 H20 chipsets from TSMC, driven by robust demand from the Chinese market. This order follows a recent reversal in U.S. policy that permitted the export of H20 AI chips to China.