Nvidia's H20, an AI and compute chip specifically modified for use in the Chinese market, has reportedly stopped production in the midst of security concerns from Chinese officials.

As reported by , and citing "two people with direct knowledge of the communications", Nvidia has reportedly "told some [[link]] of its component suppliers to suspend production work." Amkor Technology and Samsung are two companies which [[link]] were reportedly told about this new development.

But first, a quick rundown on Nvidia's H20 chip. It is effectively a less powerful, modified version of the H100 GPU, a large-scale processor that is used for AI workloads, data analysis, and more. In April, Nvidia was due to trade restrictions on chips to China. A month after this, export controls made .

Then, , the US government had signed off on Nvidia selling its chips in the Chinese market. In return, the US would see 15% of the revenue made from these sales. This was promptly hit by concerns from the Chinese government about backdoors in chips ().

Nvidia was adamant that there are , but still, the the sale of H20 chips due to security concerns.

, China reportedly told data center operators to source the majority of its chips from domestic manufacturers instead. This is part of a broader plan to move away from relying on US tech. According to , ByteDance, Alibaba Group, and Tencent Holdings were among the firms pushed just last week to suspend any purchases of Nvidia chips.

It's been a wild couple of months for Nvidia when it comes to this specific chip. It saw demand accounting for 700,000 H20 chips after declaring it could go on sale, which is why the halting of production feels like a particularly strong blow.

Nvidia's Jensen Huang has made it clear his desire to provide chips to China. In response to the original chip export controls, , "If they don't have enough Nvidia, they will use their own." He has also that Chinese competitors are "quite formidable", whilst that the Chinese military wouldn't use US chips as "they simply can't rely on it."

Effectively, he doesn't seem to think that Nvidia is giving China an edge when it comes to the AI land grab, and the potential of extra cash from the region certainly couldn't hurt Nvidia or its stockholders' view of the company.

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