Quick overview

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China advised local businesses not to use Nvidia Corp.’s H20 processors, especially for government purposes, making it harder for the chipmaker to recover billions of dollars in lost revenue from China and for the Trump administration to leverage those sales for U.S. gains. According to people familiar with the matter who requested anonymity to protect sensitive information,

Chinese authorities have recently issued notices to various companies discouraging the use of outdated semiconductors.

These sources said that the restrictions were particularly strict about state enterprises and private companies using H20s for any government or national security-related projects. Beijing’s overall efforts also affect AI accelerators from Advanced Micro Devices and Nvidia.

“It’s unclear if any letters specifically mentioned AMD’s MI308 chip,” one person said. The U.S. recently allowed both companies to resume operations.

Beijing has sent letters to companies asking why they chose to buy Nvidia H20 chips over local options, whether they found any security vulnerabilities in the Nvidia hardware, and if such a decision was necessary given domestic options. The notices align with state media reports that raise concerns about the reliability and security of H20 processors.

Nvidia has repeatedly denied that its chips have such flaws, although Chinese regulators have directly addressed these concerns with the company.

China’s strictest chip regulations mainly apply to sensitive applications, similar to restrictions imposed on Tesla Inc. vehicles and Apple Inc. iPhones due to security concerns in specific settings. At one point, the Chinese government also prohibited the use of chips in vital infrastructure from Micron Technology