The Chinese government is reportedly telling local companies to refrain from buying NVIDIA’s H20 chips, and it’s all due to some “insulting comment” by the US Commerce Secretary, Robert Lutnick. According to the Financial Times, the Cyberspace Administration of China (CAC), the National Development and Reform Commission (NDRC), and the Ministry of Industry and Information Technology (MIIT) voiced their dislike of Lutnick’s apparent comments.
In an interview with CNBC, Lutnick said “We don’t sell them our best stuff, not our second best stuff, not even our third best. The fourth one down, we want to keep China using it… The idea is the Chinese are more than capable of building their own. You want to keep one step ahead of what they can build, so they keep buying our chips. You want to sell the Chinese enough that their developers get addicted to the American technology stack. That’s the thinking.”
It also doesn’t seem like Chinese companies have a say in the matter either. Supposedly, the CAC issued informal notices to China’s biggest tech firms, which include ByteDance and Alibaba, to stop new orders for the H20 chips until the government has conducted a national security review. If they don’t comply, they run the risk of being hit with hefty fines.
You’ll recall that NVIDIA was recently given the greenlight to continue selling its H20 AI Chips to China, as well as striking a deal with the Trump administration to give 15% of all sales of its AI chips in China to it.
Compounding the tense situation are statements from Chinese state-affiliated media accounts of WeChat that have voiced concerns about NVIDIA’s AI chips being “unsafe”, saying that they are riddled with backdoors, spyware, and kill switches. An accusation NVIDIA has vehemently denied in a public statement.
On the flip side, the GPU company is reportedly already building a new AI chip based on the current Blackwell architecture and more powerful than the H20 Chip, and specifically for the Chinese market.
