Nvidia halts China H20 chip production after Beijing backlash
Nvidia Halts Production of H20 AI Chip Amid Security Concerns
Nvidia has made the decision to stop production of its controversial H20 AI chip after pressure from Beijing to Chinese companies to discontinue the use of US hardware due to alleged security risks. This move has caused a stir among investors and sent shockwaves through the global chip industry.
The chip giant has instructed suppliers Samsung Electronics and Amkor Technology to cease manufacturing this week following China’s crackdown on the modified processor meant for its market, as reported by The Information.
Shares of Nvidia dropped 1.1% in early trading on Friday as the news of the halt in H20 production weighed on its China business, which brought in $17 billion in revenue last year.
This development raises concerns about the demand for the H20, a modified version of Nvidia’s main accelerators designed to navigate around US export restrictions while still accessing China’s profitable market.
Rivals like Huawei Technologies and Cambricon Technologies are now in a position to capitalize on this situation. Cambricon’s stock surged by 20% on Friday, leading to a surge in local chipmakers’ stocks.
The timing of this halt couldn’t be worse for Nvidia, which had already written off $5.5 billion in H20 inventory following the initial ban by the Trump administration.
Recent warnings from Chinese regulators against using American chips citing security risks have added to the uncertainty. Nvidia’s CEO Jensen Huang, caught off guard by the move, has stated that the H20 does not contain any backdoors.
While both Nvidia and rival AMD have received approval from the US government to resume limited AI chip sales to China, Beijing is intensifying efforts to reduce dependence on American technology.
At the same time, unfinished Nvidia chips are reportedly accumulating at Amkor, indicating the impact of the production halt.
Nvidia is hopeful about launching a successor to the H20, but Huang emphasized that approval from the incoming Trump administration would be crucial for any new product offerings to China.
Analysts from Bloomberg Intelligence have noted that the production halt introduces “fresh uncertainty” about Nvidia’s business in China, although they anticipate strong demand in the US to mitigate the impact.
Nvidia is set to report earnings next week, providing insight into how escalating trade tensions are affecting the leading chipmaker.
A spokesperson for Nvidia reiterated the company’s commitment to cybersecurity and emphasized that the H20 is safe for commercial use without any backdoors.
The Post has reached out to relevant parties for comments on this matter.
Source: Original Article Link
