Nvidia’s position in the massive Chinese market is suddenly looking shaky. The country’s top internet regulator has summoned the American chipmaker to answer questions about potential “backdoor” security risks in its H20 AI chip. This is the very chip Nvidia designed specifically for China after the U.S. government banned its more powerful processors, making the situation even more complicated.
The core of China’s concern is a recent U.S. proposal that would require location verification on exported chips. Chinese authorities fear this could be used to spy on Chinese users, compromising their data and privacy. While Nvidia has strongly denied that its chips have any such backdoors, the Chinese government is demanding answers.
This new scrutiny comes at a strange time. Even as tensions rise, demand for the H20 chip in China is booming. Nvidia recently placed an order for 300,000 units with its manufacturer, demonstrating the significant reliance of Chinese companies, research institutes, and state-backed projects on its technology. This follows a high-profile visit from CEO Jensen Huang, who tried to show Nvidia’s commitment to the market.
Some analysts believe this is just a political move, with China mirroring the same security concerns the U.S. has raised about Chinese tech. However, with Nvidia also facing an antitrust investigation in the country, the regulatory pressure is mounting. While China may still need Nvidia’s chips for now, this new security probe shows that doing business there is becoming more unpredictable than ever.
