NVIDIA suspends production on H20 chip over security concerns

NVIDIA has reportedly halted production of its H20 AI chip that is designed specifically for the Chinese market, with NVIDIA sending notifications to Arizona-based Amkor Technology and Samsung Electronics to stop manufacturing.

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NVIDIA's AI chips, specifically the H20, are yet again up in the air. The sale of AI chips to China has been nothing short of a fiasco, with NVIDIA initially set to lose a staggering $5.5 billion over trade restrictions implemented on China for high-powered AI chips. These trade restrictions were set to ensure the US remains at the top of the global AI race, and at the time cited national security risks as China would use NVIDIA's GPUs to develop a sophisticated AI that the Chinese military could then utilize.

Only a month later, the H20, which is a heavily modified version of the H100 GPU, was banned from entering China. However, by July, the US government had changed its stance on NVIDIA chips sold to China. NVIDIA was able to secure a license, which would approve exporting the H20 to China, provided that 15% of the revenue from these sales would be directly allocated to the US government.

The flip-flopping of these decisions has now raised security concerns about the chips from Chinese government officials. NVIDIA has assured all parties that there aren't any backdoors in any of its chips, but those statements didn't convince the Cyberspace Administration of China, which has now prevented the sale of H20 chips over possible security threats.

While this back and forth continues between the US government, China, and NVIDIA, the Chinese government is pushing its biggest chip-hungry companies to source the hardware they are after domestically, with The Information reporting companies such as ByteDance, Alibaba Group, and Tencent Holdings have been told to suspend purchases of NVIDIA chips.

The Information report cites "two people with direct knowledge of the communications," who said NVIDIA has "told some of its component suppliers to suspend production work." Those two companies were Amkor Technology, which handles the advanced packaging for the chip, and Samsung Electronics, which supplies the high-bandwidth memory (HBM) modules for the GPU.