NVIDIA reportedly stops production of H20 AI chips

NVIDIA is reportedly asking its suppliers to stop production related to its H20 AI chips for the Chinese market. According toThe Information, the company told Arizona-based Amkor Technology and Samsung Electronics to pause their work on the H20. Amkor produces advanced packaging for the H20 chips, while Samsung supplies memory for NVIDIA.ReutersAlso reported that NVIDIA asked Foxconn, which is responsible for backend processing of the chip, to suspend its work. "We constantly manage our supply chain to address market conditions," the company said.CNBCin a statement when asked to comment about the supposed production pause.

The US government hadblocked NVIDIAfrom selling the H20 in China back in April, out of concerns that the country could use it to develop AI technology for its military. It allowed the company toresume sellingthe chip in China by July, reportedly afterClosing a dealthat would give it 15 percent of the sales. But China did not welcome the H20 with open arms. Local regulators instructed the largest Chinese technology companies, including ByteDance and Alibaba, to stop new orders for H20 chips, citing security concerns. The Cyberspace Administration of China contacted NVIDIA, claiming that AI experts had revealed that the chips could be tracked and controlled remotely. NVIDIA CEO Jensen Huang admitted that Chinese regulators had asked him about the alleged "backdoor" and said that he made it clear that it did not exist. "Hopefully, the response we have given to the Chinese government will be sufficient," Huang said.

A recent report by theFinancial Times, however,claimedThat Chinese authorities did not issue warnings against using NVIDIA chips just because of security concerns. Apparently, they found certain remarks by US Commerce Secretary Howard Lutnick "insulting." When the US allowed shipments of the H20 to China again, Lutnick said during an interview: "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... You want to sell the Chinese enough that their developers get addicted to the American technology stack."

H20 is currently the most advanced AI chip NVIDIA can sell in the Chinese market, but the company is reportedlydevelopinga more powerful product. It will be based on the company's Blackwell architecture,ReutersPreviously reported, and will be capable of half the computing power of NVIDIA's Blackwell Ultra GPUs.