Nvidia halts H20 AI chip work under China pressure: report

Nvidia has told suppliers, including Samsung Electronics and Amkor Technology, to halt work on its H20 AI chip.

The move comes after Chinese authorities reportedly advised local firms not to use the H20 chip.

Nvidia and AMD recently received approval from US authorities to resume sales of lower-end AI chips in China, under an arrangement that requires both companies to share 15% of related revenue with the US government.

Both firms now face pressure as Chinese customers are being encouraged to buy chips from domestic producers instead.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ China’s semiconductor dependency creates strategic vulnerability despite independence goals

The H20 halt highlights a critical issue in China’s tech strategy: the country consumes 60% of global semiconductors but produces only 13% domestically1.

This gap explains why Beijing’s directive to avoid Nvidia chips creates immediate supply chain disruptions, forcing the company to halt production just weeks after securing export approval.

China’s “Made in China 2025” initiative aims for 70% self-sufficiency in high-tech industries by 20251, yet Chinese companies remain dependent on Nvidia’s CUDA software ecosystem and hardware performance that domestic alternatives cannot match2.

The situation reveals how political tensions can quickly override economic relationships, even when both sides have significant financial incentives to continue trading.

This dependency shows why achieving true semiconductor independence remains challenging despite decades of investment and policy focus from Beijing.

2️⃣ Revenue-sharing model signals new approach to managing tech trade tensions

The 15% revenue-sharing arrangement between Nvidia, AMD, and the US government represents an attempt to balance national security concerns with economic interests3.

This deal allowed chip sales to continue while giving Washington direct financial benefit from technology transfers to a strategic competitor, marking a departure from traditional export controls that simply banned sales outright.

However, the arrangement faced criticism from Senate Democrats who warned it compromised US competitive advantages4, while Beijing’s subsequent directive to avoid the chips suggests the model failed to address underlying geopolitical tensions.