China Warns Its Companies Against Buying Nvidia H20 Chips
Nvidia has run into some resistance from the Chinese government which is telling locals to not buy their chips.
Quick overview
- Nvidia has received U.S. government permission to sell its H20 chips to China, but the Chinese government is discouraging their use.
- Nvidia's stock has experienced a bearish trend this week, dropping from $182 to $169 before stabilizing at $175.
- China is promoting local alternatives to Nvidia's chips and has issued warnings against their use in government and businesses.
- Despite current challenges, Nvidia's stock performance is expected to recover, unless a formal ban from China is implemented.
Nvidia (NVDA) may have permission from the U.S. government to sell its powerful H20 chips to China, but the Chinese government does not want them.
Nvidia’s stock has been bearish this week, from a high of $182 per share on Monday to a low of $169 on Wednesday, today’s price of $175 is in the middle but still shows the AI chip manufacturer’s stock trending downward. Nvidia may be following broader market pressure, but they are not being helped by the Chinese government either.
China VS the United States
Beijing is telling its citizens that they should avoid buying Nvidia’s powerful H20 chip for use in government offices in particular, but the warning also extends to Chinese businesses. It should be noted that this is not an outright ban, however, the action is likely to hurt Nvidia’s prospects on this now open market.
It was only recently that U.S. President Donald Trump removed the ban on selling H20 chips and other powerful AI chips to the Chinese market. There were concerns that these advanced tech items would allow the Chinese market to compete directly with the United States and give Chinese government agencies similar technical capabilities as their American counterparts.
Nvidia sold the chips to China anyway at a high markup in order to cover the fines for selling there. Now, they have freedom to sell to that market, but there is considerable pushback from the Chinese government.
China Pushes Local Alternatives
In recent weeks, the Chinese government has been sending out warnings against using H20 chips and similar products from Nvidia and AMD. They are urging their people to buy local alternatives and are calling the H20 chips obsolete.
They are also sending questionnaires to businesses that buy H20 chips and other imported AI chips, asking local companies why they are not buying the local options. Of course, Nvidia’s top performing chips have been proven to work and are already compatible with the most cutting edge AI products, which is why they have more market capitalization than any other company in the world and certainly more than their direct competitors.
The poor performance of Nvidia this week is likely just a minor setback during a particularly good year. We saw Nvidia’s stock dip during March and again in April of 2025. Both of those bearish periods were times when tariff fears had escalated and there was concern that Nvidia would be taxed out of most of its profits.
Since late April, Nvidia’s stock has been steadily climbing, and this week’s dip should pass soon. We expect to see the stock impacted little by China’s current action as it warns locals away from buying Nvidia chips, but if China puts a definite ban in place, then that could be a problem.
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