Nvidia's H20 Chips in Crossfire as China Pushes for Domestic Solutions

Chinese authorities are discouraging the use of Nvidia's H20 chips for government and national security purposes, impacting sales in China. This comes amidst calls for local tech companies to justify their chip purchases, urging a shift towards domestic alternatives like Huawei's AI chips. The initiative also affects AMD's AI accelerators.

Chinese authorities have advised local firms against utilizing Nvidia's H20 chips, particularly for governmental applications, Bloomberg News revealed recently. This decision could hinder Nvidia's efforts to boost its declining sales in China.

State and private enterprises have reportedly been issued notices advising them to refrain from using these less-advanced chips in any government or national security-related tasks. Nvidia has clarified that the H20 is not intended for military or governmental infrastructure.

Amid this backdrop, domestic tech giants such as Alibaba and ByteDance are being questioned by China's Ministry of Industry and Information Technology regarding their orders of the H20 chip and are being prompted to explore domestic alternatives. Meanwhile, shares of China's leading chipmaker SMIC rose significantly due to expected increased demand for locally-produced chips.