China denies acceptance of Trump's outdated Nvidia chips, contradicting the agreed tariff peace
In a significant move, China is putting pressure on tech giants like Alibaba and ByteDance to reconsider their orders for Nvidia's H20 AI chips. The Chinese government has raised concerns about potential security vulnerabilities in the chips, which could potentially allow U.S. access to sensitive Chinese data, posing a threat to national security [1][2][4].
This decision follows a warning from Beijing that led Nvidia to halt production of the H20 AI chips, despite prior authorization for sale in China. The fears revolve around the risks of relying on foreign technology that might be susceptible to espionage or backdoor exploits, a significant issue amidst the intensifying U.S.-China tech rivalry [1][3].
Beyond security, China's push is also motivated by strategic self-reliance, aiming to curb dependence on American AI chip technology [1][2]. In response, China is accelerating investments in domestic AI chip development, with firms like Huawei advancing alternatives such as the Ascend 920 chip, promising comparable performance to the Nvidia H20 [5].
Notably, Nvidia developed a slightly downgraded version of the H20 chip to meet export control requirements. However, the company has denied claims of "kill switches" or backdoors in the chips [7].
In a unique move, Nvidia and AMD agreed to a revenue-sharing arrangement, pledging to remit 15% of their H20 and AMD MI320 chip sales in China back to the U.S. Treasury [6]. As of the provided context, there is no information about whether President Donald Trump has greenlighted Nvidia to resume operations with China [8].
The use of Nvidia's H20 AI chips has become politically incorrect in China, according to a Chinese data center operator. Chinese regulators, including the Ministry of Industry and Information Technology (MIIT), have asked tech firms to explain why they are purchasing Nvidia's chips instead of using domestic alternatives [9]. Chinese regulators have shown skepticism toward the H20 chips, cautioning state-owned companies against their use over fears of security vulnerabilities and foreign dependence [10].
Some main buyers of the H20 AI chips have cut their orders due to scrutiny from Chinese regulators. However, in a recent development, the U.S. government reversed course and granted export licenses for the original H20 chips in mid-July 2025, allowing Nvidia to resume sales to China [11].
As of August 12, 2025, there is no new information provided about whether President Donald Trump has greenlighted Nvidia to resume operations with China. The tech industry continues to watch this development closely, as it could have far-reaching implications for the global tech landscape.
- The push from China to invest in domestic AI chip development, such as Huawei's Ascend 920 chip, stems from concerns about relying on foreign technology like Nvidia's H20 AI chips, which could potentially pose security vulnerabilities and contribute to foreign dependence.
- Amidst the ongoing U.S.-China tech rivalry and escalating policy-and-legislation, the Chinese government has raised general-news about potential risks associated with the use of foreign AI technology, leading to scrutiny of tech giants like Alibaba and ByteDance over their orders for Nvidia's H20 AI chips.
- Artificial-intelligence and technology policies have become a significant factor in U.S.-China conflicts, as seen in the recent decision by China to pressure tech giants over their purchases of Nvidia's H20 AI chips, due to concerns about national security and the potential for foreign espionage or backdoor exploits.
