Nvidia Orders Halt to H20 Production After China Directive Against Purchases
The Takeaway
Nvidia’s production halt on H20 chips signals that the chip giant’s hopes of maintaining its foothold in the Chinese market remain in limbo. A deal with the Trump administration allowing the sales was countered by a directive from the Chinese government to local tech companies not to buy Nvidia chips.
Nvidia has told some of its component suppliers to suspend production work related to the H20, its chip tailor-made for the Chinese market, according to two people with direct knowledge of the communications. The directive comes weeks after the Chinese government told local tech companies to stop buying the chips due to alleged security concerns, The Information previously reported.
The production halt signals that despite the Trump administration’s decision to allow Nvidia to resume selling the chips after a monthslong ban, the chip giant’s hopes of maintaining its foothold in the Chinese market remain in limbo—now because of the Chinese government’s policies. Chinese authorities fear Nvidia’s chips could contain backdoors that funnel sensitive data from China to the U.S., The Information previously reported. As a result, Chinese authorities are encouraging local companies to use Chinese-made AI chips, such as those sold by Huawei.
Nvidia sent its communications this week on the H20 to Arizona-based Amkor Technology and South Korea’s Samsung Electronics, according to the two people. Amkor handles the advanced packaging of Nvidia’s H20 chips, a process that involves combining multiple components, while Samsung supplies high-bandwidth memory chips for the H20.
In a statement, Nvidia said, “We constantly manage our supply chain to address market conditions.” It added that “allowing U.S. chips for beneficial commercial business use is good for everyone.”
Nvidia also denied that its chips have backdoors “that would give anyone a remote way to access or control them. The market can use the H20 with confidence.”
Amkor and Samsung didn’t respond to requests for comments.
Nvidia’s supplier directive highlights how the company is being squeezed by intensifying trade tensions between the U.S. and Chinese governments. In recent years the Biden administration clamped down on exports of advanced AI chips to China, choking off much of Nvidia’s business there. Between its fiscal 2022 and 2025 years, the share of Nvidia’s revenue coming from China has fallen from 26% to 13%.
Nvidia responded to U.S. export blocks by designing special chips for China that aren’t as powerful but this past spring, President Donald Trump blocked Nvidia from selling some of those China-tailored chips there.
Last month, Trump reversed that ban, in exchange for an agreement for the U.S. government to get a 15% cut of the resulting revenues. After Trump’s change of heart, Nvidia placed additional orders for high-bandwidth memory from Samsung and transferred semi-finished chips from its manufacturing partner, Taiwan Semiconductor Manufacturing Co., to Amkor for packaging.
Trump’s reversal had sparked a buying spree from Chinese tech firms, who ordered a total of 700,000 H20 in the subsequent weeks, The Information reported last week.
Semi-finished chips—the individual processor dies ready for the final packaging step—are now piling up at Amkor, creating uncertainty about their future. Samsung also received notices from Nvidia that H20 chip production has been suspended, said one of the two people cited above.