China’s Policymakers Are Reportedly Pushing to Completely Ban NVIDIA’s AI Chips in the Country, But Weak Domestic Alternatives Are Holding Them Back

Muhammad Zuhair

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It seems that Beijing is now concerned with the domestic industry's reliance on American AI technology and is exploring newer options.

Chinese Big Tech Has Reportedly Cancelled Or Significantly Reduced NVIDIA's H20 AI Chip Orders

Well, there's no doubt that China heavily relies on AI chips and equipment from the US, mainly because domestic options cannot serve the nation's needs. However, recent events have forced Beijing to counter the influence of NVIDIA's chips in the region, which is why China's Cyberspace Administration opened up a regulatory investigation to determine the presence of security backdoors in the H20 AI accelerators. In a report by Financial Times, it is claimed that China's lawmakers are proposing an 'outright ban' of the H20 AI chip, but it isn't as easy as it might sound.

It is claimed that Chinese officials are voicing opposition to NVIDIA's AI chips after the recent remarks by US Commerce Secretary Howard Lutnick, where he stated that the US should make Chinese developers "addicted" to American technology, and that the nation isn't getting the "best stuff". China's senior leaders have found these comments insulting, and they are now convincing local tech giants to slow down their pursuit of NVIDIA's H20 AI chips.

Many Chinese firms claim to have significantly downsized their H20 orders or completely abandoned them, which shows that there is a growing resistance to adopting the American AI tech stack. Moreover, it is also reported that domestic firms favor switching to Chinese platforms such as those from Huawei and Cambricon, given that the solutions from these companies are said to be decent enough for inferencing workloads.

China hopes to address its AI computing needs through domestic offerings by next year once production lines scale up, but for now, the region has no other option than NVIDIA. We recently reported on how DeepSeek's next AI model, the R2, was delayed due to the use of domestic AI chips, and the firm later switched to NVIDIA's tech stack, which shows that China's AI advancements are in dire need of American chips for now.