NVIDIA has hit another roadblock in China as the government is reportedly urging local companies to avoid using its newly cleared H20 AI GPUs, despite recent US export approval. 
According to Bloomberg, Chinese authorities have sent letters to several domestic firms, warning against deploying the H20 chips-especially in national security or government projects-over concerns about potential backdoors or tracking mechanisms.
This follows earlier reports that Chinese cybersecurity officials were investigating NVIDIA’s H20 GPUs for hidden tracking features. While NVIDIA has firmly denied the allegations, the political tension and the legacy of Trump-era restrictions-once banning these GPUs before reversing the decision-have fueled persistent skepticism.
At the heart of the issue is China’s push for technological self-reliance. The government is actively encouraging firms to adopt domestically produced AI chips, such as those developed by Huawei. However, despite Huawei’s progress, US sanctions have left its chips trailing NVIDIA’s in performance, and NVIDIA’s CUDA ecosystem remains a significant advantage.
AMD’s AI accelerators have also drawn scrutiny, though it remains unclear whether the government’s caution applies broadly across its product line. The fear is twofold: potential foreign surveillance and the risk of slowing down China’s homegrown AI chip industry.
Ironically, US policymakers had previously argued that allowing NVIDIA to sell AI chips in China could help maintain US technological dominance, while simultaneously limiting resources that could aid Huawei’s advancement. But as of now, even with export licenses in hand, NVIDIA faces a challenging road in winning over the trust of Chinese institutions.