China tells ByteDance, Alibaba, and Tencent to halt Nvidia’s H20 chip over security concerns

Beijing is tightening the screws on foreign chipmakers again, this time taking aim at Nvidia’s H20, the most advanced AI chip the U.S. company is currently allowed to sell in China.

According to Bloomberg, Chinese regulators have told local tech giants, including Alibaba, ByteDance, and Tencent, to suspend purchases of the H20, particularly for projects tied to government or national security. Multiple companies reportedly received official notices discouraging their use in any state enterprise or sensitive private-sector work.

Citing security risks from the US, China urged local tech firms not to use Nvidia’s H20 chip for government or security-related work

“Beijing has urged local companies to avoid using Nvidia Corp.’s H20 processors, particularly for government-related purposes, complicating the chipmaker’s attempts to recoup billions in lost China revenue after the Trump administration reversed an effective US ban on such sales,” Bloomberg reported.

China’s Nvidia H20 Ban Comes Amid U.S. Push for AI Chip ‘Kill Switch’

The report lands just three months after the U.S. revealed plans to add a “kill switch” into Nvidia’s AI chips to curb China’s AI ambitions. Back in May, a U.S. lawmaker said he would push legislation requiring verification of where AI chips — including Nvidia’s — end up after sale.

However, Nvidia insists the chip is “not a military product or for government infrastructure” and pushed back on the idea that China depends on U.S. semiconductors for official use. “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 company said.

The U.S. only recently lifted restrictions on selling the H20 to China, but the move was quickly followed by Chinese state media raising security concerns. Nvidia says there are no “backdoors” in the chip that could enable remote access or control.

Reports from the Financial Times say the Ministry of Industry and Information Technology is questioning major firms on why they’re ordering H20 chips instead of homegrown alternatives. Some companies are now considering trimming their orders. The Information adds that China’s Cyberspace Administration ordered over a dozen firms — including Tencent — to pause purchases altogether until regulators finish investigating possible security risks.

The timing coincides with China’s push to replace foreign tech with domestic solutions, including AI chips from Huawei. Shares of SMIC, China’s largest contract chipmaker, jumped 5% on expectations of rising demand for locally made semiconductors, Reuters reported.

The clampdown also comes as U.S. President Donald Trump floated the idea of letting Nvidia sell a scaled-down version of its upcoming Blackwell chip in China, despite concerns in Washington that advanced AI hardware could boost Beijing’s military capabilities.

Meanwhile, the Trump administration recently confirmed a deal requiring Nvidia and AMD to give the U.S. government 15% of revenue from some advanced chip sales in China. China’s new guidance reportedly covers certain AMD AI accelerators as well, though it’s unclear if AMD’s MI308 was specifically named.

Neither Alibaba, ByteDance, Tencent, nor AMD has publicly commented on the reports. Nvidia hasn’t addressed the latest Financial Times and Information claims.