NVIDIA reportedly stops production of H20 AI chips

NVIDIA has reportedly asked its suppliers to halt production related to its H20 AI chips for the Chinese market. According to The Information, the company told Arizona-based Amkor Technology and Samsung Electronics to put a pause on their work for the H20. Amkor produces advanced packaging for the H20 chips, while Samsung supplies memory for NVIDIA. Reuters has also reported that NVIDIA asked Foxconn, which is in charge of backend processing for the chip, to suspend its work. "We constantly manage our supply chain to address market condition," the company told CNBC in a statement when asked to comment about the supposed production pause. 

The US government had blocked NVIDIA from selling the H20 in China back in April, out of concerns that the country could use it to develop AI tech for its military. It allowed the company to resume selling the chip in China by July, reportedly after closing a deal that would give it 15 percent of the sales. But China didn't welcome the H20 with open arms. Local regulators instructed the biggest Chinese tech companies, including ByteDance and Alibaba to stop new orders for H20 chips, citing security concerns. The Cyberspace Administration of China talked to NVIDIA, claiming that AI experts had revealed that the chips could be tracked and controlled remotely. NVIDIA CEO Jensen Huang had admitted that Chinese regulators asked him about the supposed "backdoor" and said that he made it clear it didn't exist. "Hopefully the response that we've given to the Chinese government will be sufficient," Huang said. 

A recent report by the Financial Times, however, claimed that Chinese authorities didn't issue warnings against using NVIDIA chips just because of security concerns. Apparently, they found certain remarks by US commerce secretary Howard Lutnick "insulting." When the US allowed shipments of the H20 to China again, Lutnick said during an interview: "We don't sell them our best stuff, not our second best stuff, not even our third best. The fourth one down, we want to keep China using it... You want to sell the Chinese enough that their developers get addicted to the American technology stack."

The H20 is currently the most advanced AI chip NVIDIA can sell in the Chinese market, but the company is reportedly developing a more powerful product. It will be based on the company's Blackwell architecture, Reuters previously reported, and will be capable of half the computing power of NVIDIA's Blackwell Ultra GPUs.

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