China summons Nvidia over H20 chip security after US trade deal talks

Chinese authorities summoned Nvidia Corp. to discuss alleged security risks related to its H20 chips, casting doubt over the domestic business of the world’s most valuable company weeks after co-founder Jensen Huang met senior officials in Beijing. 

The Cyberspace Administration of China called company representatives into a meeting to discuss what it deemed serious security vulnerabilities with the artificial intelligence chip. In a statement, the internet watchdog cited comments by US lawmakers about the need to install tracking capabilities into advanced chips sold to other countries. The agency asked staff to explain potential risks and provide documents as needed, the CAC said without elaborating. 

 

The revelation came just days after US and Chinese officials met in Stockholm to extend their tariff truce, talks Chinese state media said had “deepened mutual trust.” Huang himself recently concluded a high-profile visit to Beijing, where he feted national Chinese champions such as DeepSeek and celebrated the country’s rising prowess in AI. The billionaire had denied Nvidia installed backdoors in its product, saying that wouldn’t make business sense. 

The Trump administration had only recently pledged to drop export restrictions on the H20 to China, reversing its earlier stance on the AI chip. On Thursday, shares in chipmakers including Semiconductor Manufacturing International Corp. and Cambricon Technologies Corp. rose more than 5% after the CAC’s notice. Nvidia didn’t respond to a request for comment outside of regular business hours. Its stock rose 2.5% on Germany’s Tradegate, boosted in part by positive earnings from Meta Platforms Inc. and Microsoft Corp. 

“The CAC’s scrutiny over H20 security risks could further erode Nvidia’s Chinese market share amid rising domestic competition, and immediate H20 sales resumption may face delays due to regulatory uncertainty,” Forrester’s Principal Analyst Charlie Dai said. “It also aligns with China’s broader push to accelerate domestic semiconductor alternatives for technological self-reliance amid US export controls. In addition, the timing amplifies China’s leverage in ongoing US trade talks.” 

Washington in recent weeks had lifted a spate of export controls — including on chip design software, imposed ahead of last month’s trade talks in London. That’s in return for China allowing more sales of rare-earth minerals needed to make a range of high-tech products, something US negotiators thought they’d achieved during prior talks in Geneva.  

Commerce Secretary Howard Lutnick had touted the resumption of sales of the H20 as a breakthrough that came from discussions in London, framing it as a concession to Beijing. Thursday’s revelation however may send a signal that China doesn’t view the H20 — a less-advanced chip  originally designed to comply with US sanctions — as a valuable offering. 

Chinese agencies have previously singled out major American companies for scrutiny. In the past, they’ve announced probes into acquisitions by US firms — including Nvidia — an arena in which regulators wield approval powers. In October, an arm of the CAC warned of potential security flaws and high failure rates in Intel Corp. processors. The government in 2023 barred Micron’s chips from critical infrastructure over cybersecurity concerns, though the US company has since moved to repair ties. Both companies have stressed their commitment to product security. 

“US lawmakers have previously called for advanced chips exported from the US to be equipped with location-tracking features,” the CAC said in its latest statement. “The location-tracking and remote shutdown capabilities on Nvidia computing chips are ready, according to US AI experts.” 

Nvidia and Advanced Micro Devices Inc. said this month they would resume sales of some AI chips in China after securing Washington’s assurances that such shipments would get approved. Such export license approvals could generate billions of dollars in total revenue for the companies this year.  

However, US lawmakers slammed risks it would boost Beijing’s military capabilities and expand its ability to compete with the US in AI. Companies like Huawei Technologies Co. now spearhead a nationwide effort to develop homegrown technologies to reduce China’s reliance on American hardware and circuitry, and catch the US in potentially game-changing technologies.  Huawei’s Ascend chips have evolved into the closest equivalent to Nvidia’s accelerators within China. Its 910C is considered competitive with the H20 particularly for inference, or hosting AI services. 

During his trip to China this month, Huang took almost every opportunity to celebrate China’s technological ambitions, name-checking prominent local firms from Alibaba Group Holding Ltd. to Deepseek and Tencent Holdings Ltd. 

“I have no information to offer on this,” Ministry of Commerce spokesman He Yadong said during a regular briefing Thursday, when asked whether the move by CAC could impact trade negotiations.