China Tells Firms to Avoid Nvidia H20 Chips for Government Use

China has advised local companies to avoid using Nvidia H20 chips, especially for government-related work. Bloomberg reported on Tuesday that official notices were sent to a range of firms. These notices discouraged using the H20 chip for any work linked to the government or national security.

The H20 is a less-advanced AI chip. Washington recently lifted a ban on its sale in China. It is now the most advanced chip Nvidia can legally sell there. However, this new guidance could hurt Nvidia’s efforts to boost its declining China sales.

China Tells Firms to Avoid Nvidia H20 Chips for Government Use

Nvidia responded on Tuesday, stating that the H20 chip is “not a military product or for government infrastructure.” The company also said China has enough domestic chips for its needs and has never relied on U.S. chips for government operations. It compared the situation to how the U.S. government would not depend on Chinese chips.

Reports in Chinese state media have raised security concerns about the H20. Nvidia has denied these claims, saying the chip has no “backdoors” that could allow remote access or control.

According to the Financial Times, Beijing is pressuring large tech companies like Alibaba and ByteDance over their H20 chip orders. The Ministry of Industry and Information Technology has reportedly asked these firms to explain why they are not using local alternatives. As a result, some companies are considering reducing their orders. Alibaba and ByteDance have not commented on the matter.

China is also working to promote its own technologies. This includes AI chips developed by Huawei, Nvidia’s main Chinese rival in the AI chip race. On Tuesday, shares in China’s top contract chipmaker, SMIC, rose 5% as investors expected higher demand for domestic chips.

The curb on H20 chips comes after recent remarks by U.S. President Donald Trump. On Monday, Trump suggested he might allow Nvidia to sell a scaled-down version of its advanced Blackwell chip in China. This is despite concerns in Washington that China could use advanced AI technology to strengthen its military.

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China’s foreign ministry responded by saying it hopes the U.S. will take practical steps to keep the global chip supply chain stable.

Last week, the Trump administration confirmed a deal with Nvidia and AMD. Under this agreement, the U.S. government will receive 15% of revenue from some advanced chip sales in China.

Bloomberg also reported that China’s guidance affects AI accelerators from AMD. It is unclear if Chinese authorities specifically mentioned AMD’s MI308 chip in their notices. AMD has not commented on the matter.

The latest move highlights the growing technology tensions between the U.S. and China. Both sides are pushing to secure their positions in the global AI race. For Nvidia, the restrictions in China come at a time when competition from domestic players like Huawei is rapidly increasing.