The Chinese government advises companies against purchasing the Nvidia H20 accelerator. The American GPU specialist had just regained permission to sell the chips in China.
China does not want companies to buy Nvidia’s H20 accelerator. Nvidia developed this light version of its GPUs specifically for the Chinese market. The American government has imposed strict export regulations, requiring the Nvidia H20 to remain below a certain performance threshold.
(No) Threat to National Security
After Nvidia invested billions in developing the H20 tailored to export regulations, Trump and his administration reversed their stance: even that chip could no longer be sold due to the risk of military applications. This was a setback for CEO Jensen Huang’s company.
After necessary lobbying, the stance shifted again. The threat to American national security from selling the H20 to China was deemed not so significant, as long as Nvidia paid fifteen percent of the revenue from those sales to the government. AMD had to make the same not-so-voluntary contribution to the government for a license for the MI308: a similar chip.
Negative Advice
Both companies hoped to recover their investments in chips for the Chinese market with an export license. This will now be more difficult than planned. According to Bloomberg, the Chinese government has contacted domestic companies, asking them not to purchase American chips.
The purchase of the Nvidia H20 is particularly discouraged. China cites national security concerns but also openly asks companies why they do not choose locally developed alternatives.
Domestic Production
China has been heavily investing in internal chip production since the US began their barrage of sanctions under the first Trump administration. The Americans aim to stay ahead of China in high-tech developments like AI. The result seems to be a temporary and limited setback for China, but mainly strongly emerging internal capabilities. Although China cannot yet match American chips today, it is rapidly working towards that goal.
Nvidia notes that China mainly advises against using the H20 for government purposes. In such contexts, the Chinese have always relied on their own hardware, it sounds. With this, Nvidia aims to minimize the potential impact on sales. In practice, it seems that China is once again moving towards American independence. This potentially hits hard for companies like Nvidia and AMD, who see a billion-dollar market slipping away due to American export policies.