China urges local firms not to use Nvidia's H20 chips, Bloomberg News reports

CHINESE authorities have urged local companies to avoid using Nvidia's H20 chips, particularly for government-related purposes, Bloomberg News reported on Tuesday, a move likely to hamper the firm's efforts to revive its slumping China sales.

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China advised tech firms to limit use of Nvidia's H20 chip in sensitive sectors, citing national security concerns.
Despite US approval to sell the chip, Beijing is pushing for domestic alternatives like Huawei's AI chips.
The move reflects growing tech tensions and strategic shifts amid US tariffs and global chip supply chain pressures.

A range of firms were sent official notices discouraging the use of the H20, a less-advanced chip, particularly for any government or national security-related work by state enterprises or private companies, the report said, citing people familiar with the matter.

Reuters could not immediately confirm the report.

Nvidia said in a statement on Tuesday that the H20 chip was "not a military product or for government infrastructure."

"China has ample supply of domestic chips to meet its needs. It won't and never has relied on American chips for government operations, just like the U.S. government would not rely on chips from China," the statement said

Washington last month lifted a ban on the sale of the H20 chip in China and it is now the most advanced artificial intelligence chip that Nvidia is allowed to sell there.

The move comes after reports in China's state media of security concerns around H20 chips. Nvidia has said there are no "backdoors" that would allow remote access or control.

Beijing is pressuring China's large tech firms such as Alibaba 9988.HK and ByteDance over orders of H20 chips, the Financial Times reported on Tuesday.

The companies have been asked by the Ministry of Industry and Information Technology to explain why they need to order H20 chips instead of using domestic alternatives, the report said, citing people familiar with the matter.

Some tech companies were planning to reduce their orders as a result of the questions from regulators, the report said.

Alibaba and ByteDance did not immediately respond to Reuters requests for comments.

China is also trying to promote the use of domestically-developed technologies including AI chips made by Huawei, the Chinese rival with which Nvidia is battling for AI chip dominance.

Shares in China's top contract chipmaker SMIC rose 5% on Tuesday on expectations of rising demand for locally-produced chips.

The H20 curb also follows comments on Monday from U.S. President Donald Trump, suggesting that he might allow Nvidia to sell a scaled-down version of its advanced Blackwell chip in China, despite deep-seated fears in Washington that Beijing could harness U.S. AI capabilities to supercharge its military.

China's foreign ministry said on Tuesday it hoped the U.S. would take practical action to maintain the stability and smooth operation of the global chip supply chain.

The Trump administration last week confirmed an unprecedented deal with Nvidia and AMD to give the U.S. government 15% of revenue from sales of some advanced chips in China.

China's renewed guidance on avoiding chips also affects AI accelerators from Advanced Micro Devices, the Bloomberg report said, adding that it was unclear whether any notices from Chinese authorities specifically mentioned AMD's MI308 chip.

AMD did not respond to a request for comment outside regular business hours.