China Probes NVIDIA H20 AI Chip Over Surveillance Fears
In a significant development reflecting the ongoing complexities of US-China tech relations, Chinese regulators have summoned NVIDIA over concerns that its H20 Artificial Intelligence (AI) chips pose security risks, specifically alleging “backdoor” vulnerabilities and potential surveillance capabilities. This move by the Cyberspace Administration of China (CAC) puts billions in potential sales for NVIDIA at stake and adds a new layer of turbulence to the already fraught semiconductor landscape.
The H20 chip is a modified version of NVIDIA’s advanced AI processing units, specifically designed to comply with US export controls that restrict the sale of high-end AI chips to China on national security grounds. The Trump administration had initially banned exports of the H20 in April 2025 but reversed this decision in July as part of a broader de-escalation ahead of trade talks, allowing NVIDIA to resume sales.
However, barely two weeks after this reversal, China’s cyberspace regulator expressed “serious security issues” with the H20 chips, citing concerns about “tracking and positioning functions” and “remote shutdown” technologies. The CAC explicitly asked NVIDIA for an “explanation regarding the security risks of vulnerabilities and back doors” and requested “relevant supporting materials”. Chinese state media, including the People’s Daily, have echoed these concerns, warning that “infected” chips could lead to a “nightmare” for cybersecurity.
NVIDIA has firmly denied these allegations, stating that “Cybersecurity is critically important to us. NVIDIA does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them”.
The Chinese regulators’ concerns appear to be a direct response to proposals by US lawmakers, such as the Chip Security Act introduced in May, which would require AI chips under export restrictions to carry location-tracking systems to detect diversion or unauthorized use, particularly in China. This suggests a tit-for-tat dynamic in the US-China tech standoff, where both sides are increasingly scrutinizing the security of foreign technology.
Despite the ongoing scrutiny, demand for the H20 chips in China remains strong. Chinese firms, including ByteDance, Alibaba, and Tencent, reportedly placed significant orders for H20 chips in Q1 2025, and NVIDIA recently ordered an additional 300,000 H20 chipsets from TSMC to meet this demand.
This latest development highlights the delicate balance NVIDIA must maintain, navigating complex geopolitical landscapes to sustain access to the crucial Chinese market while adhering to evolving regulatory pressures from both the US and China. While some analysts believe Beijing’s warning is a symbolic stance against US objections and that China still needs NVIDIA chips due to a lack of alternatives, the situation underscores the heightened tensions and the potential for further disruptions in the global semiconductor industry.