In a major escalation of the US-China tech war, Beijing has reportedly pressured Chinese local companies to stop buying the H20 chip from tech giant Nvidia Corp. This move directly challenged the recent move from American President Donald Trump, putting chipmaker Nvidia in a tough spot.
According to a Bloomberg exclusive, which cited people familiar with the situation, the Chinese government have asked companies, especially state-owned ones, to avoid using Nvidia’s H20 artificial intelligence (AI) chips—which the chipmaker made particularly for the Chinese market. Beijing’s guidance on this was strong, especially for using these chips in any work related to government or national security.
This development would be a major setback for the world’s most valued listed firm, Nvidia, and came just a day after a Reuters report revealed the chipmaker’s controversial deal with Washington.
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According to that report, Nvidia and its rival AMD agreed to give the US government 15 per cent of the money they make from selling these specific chips to China. The US government, under Donald Trump, had allowed the sales of AI chips to resume on this very condition, just months after banning more advanced chips from entering the Chinese market.
Now, it seems China doesn’t want these chips anyway. The Bloomberg report stated that Beijing has been pushing for self-reliance—their own version of ‘Atmanirbharta’—in technology, urging its firms to use chips made by Chinese companies like Huawei instead of American ones.
There were two main reasons for China’s pushback. One, Chinese officials were reportedly worried that the American chips could have hidden security risks, like location-tracking or a “remote switch” that could shut them down. Nvidia strongly denied these claims.
Two, Beijing has been planning to expand its own world-class semiconductor industry and reduce its dependence on Western technology. The government has reportedly been asking companies why they need to buy Nvidia’s chips when domestic options are available. Huawei Ascend 910C performs much better than the H20.
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The H20 chip itself is a product of this tech war. After the US banned Nvidia from selling its most powerful AI chips to China, the company designed the H20 as a less powerful version specifically for the Chinese market to comply with US rules. While not as strong as top-tier models, it is still very useful for AI tasks, and major Chinese tech companies like Alibaba and Tencent were seen as key customers. But if you check benchmarks, the H20 chips were not that impressive, and matched with the capabilities of the Huawei ones.
This shocking move by China will now create a big problem for Nvidia. First, the US government wanted a cut of its sales. Now, its biggest potential customer, China, has told its firms not to buy their chips.
It shows how global tech companies—even the biggest chipmaker in the world—are not immune to Trump’s tariff war. It has essentially been caught in the middle of the political battle between the two global superpowers.
