China Calls Nvidia Over AI Chip Security Risks

Published Date : 01/08/2025 

Chinese authorities have summoned Nvidia representatives to discuss serious security issues with the company's AI chips, specifically the H20, highlighting the ongoing trade tensions between Beijing and Washington. 

Chinese authorities summoned Nvidia representatives on Thursday to discuss “serious security issues” over some of its artificial intelligence chips, as the U.S. tech giant finds itself entangled in trade tensions between Beijing and Washington.

Nvidia is a world-leading producer of AI semiconductors, but the United States effectively restricts which chips it can export to China on national security grounds. A key issue has been Chinese access to the “H20,” a less powerful version of Nvidia's AI processing units that the company developed specifically for export to China.

The California-based firm said this month it would resume H20 sales to China after Washington pledged to remove licensing curbs that had halted exports. However, the firm still faces obstacles. U.S. lawmakers have proposed plans to require Nvidia and other manufacturers of advanced AI chips to include built-in location tracking capabilities.

Beijing's top internet regulator, the Cyberspace Administration of China, said it had summoned Nvidia representatives to discuss recently discovered “serious security issues” involving the H20. The administration asked Nvidia to “explain the security risks of vulnerabilities and backdoors in its H20 chips sold to China and submit relevant supporting materials.” The statement posted on social media noted that, according to U.S. experts, location tracking and remote shutdown technologies for Nvidia chips “are already matured.”

The announcement marked the latest complication for Nvidia in selling its advanced products in the key Chinese market, where it is in increasingly fierce competition with homegrown technology firms. CEO Jensen Huang said during a closely watched visit to Beijing this month that his firm remained committed to serving local customers. Huang said he had been assured during talks with top Chinese officials during the trip that the country was “open and stable.”

“They want to know that Nvidia continues to invest here, that we are still doing our best to serve the market here,” he said. Nvidia this month became the first company to hit $4 trillion in market value, a new milestone in Wall Street’s bet that AI will transform the global economy.

Jost Wubbeke of the Sinolytics consultancy told AFP the move by China to summon Nvidia was “not surprising in the sense that targeting individual U.S. companies has become a common tool in the context of U.S.-China tensions.” “What is surprising, however, is the timing,” he noted, after the two countries agreed to further talks to extend their trade truce. “China's action may signal a shift toward a more assertive stance,” Wubbeke said.

Beijing is also aiming to reduce reliance on foreign tech by promoting Huawei’s domestically developed 910C chip as an alternative to the H20, he added. “From that perspective, the U.S. decision to allow renewed exports of the H20 to China could be seen as counterproductive, as it might tempt Chinese hyperscalers to revert to the H20, potentially undermining momentum behind the 910C and other domestic alternatives.”

New hurdles to Nvidia’s operation in China come as the country’s economy wavers, beset by a years-long property sector crisis and heightened trade headwinds under U.S. President Donald Trump. Chinese President Xi Jinping has called for the country to enhance self-reliance in certain areas deemed vital for national security, including AI and semiconductors, as tensions with Washington mount. The country’s firms have made great strides in recent years, with Huang praising their “super-fast” innovation during his visit to Beijing this month. 

Frequently Asked Questions (FAQS): 

Q: What are the main security concerns raised by China regarding Nvidia’s H20 chips?

A: China has raised concerns about potential vulnerabilities and backdoors in Nvidia’s H20 chips, including the maturity of location tracking and remote shutdown technologies.

Q: Why did Nvidia resume H20 sales to China?

A: Nvidia resumed H20 sales to China after Washington pledged to remove licensing curbs that had halted exports, following discussions between the U.S. and China.

Q: What is the U.S. proposing to require from Nvidia and other AI chip manufacturers?

A: U.S. lawmakers have proposed plans to require Nvidia and other manufacturers of advanced AI chips to include built-in location tracking capabilities.

Q: How is Nvidia responding to the challenges in the Chinese market?

A: Nvidia CEO Jensen Huang has assured that the company remains committed to serving the Chinese market and continues to invest in the region, despite the challenges and competition from local tech firms.

Q: What is China’s strategy to reduce reliance on foreign technology?

A: China is promoting domestically developed alternatives, such as Huawei’s 910C chip, to reduce reliance on foreign technology and enhance self-reliance in areas vital for national security, including AI and semiconductors. 

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