China Bans Nvidia’s Outdated H20 Chips for Government Use, Citing National Security Fears

China has advised companies to abstain from utilizing Nvidia’s H20 chips, following the chipmaker’s recent authorization to resume shipping the less advanced artificial intelligence product. According to sources familiar with the matter, authorities have urged companies to steer clear of using Nvidia chips, or those from Advanced Micro Devices, for government and national security purposes.

The revelation follows the White House’s confirmation that both Nvidia and AMD have agreed to allocate 15% of their China revenues to the U.S. government. Last month, both companies announced they would soon resume shipping to China after the administration implemented export license requirements earlier this year. The H20 chip from Nvidia and AMD’s MI380 were developed to circumvent previous AI chip restrictions in China due to national security concerns.

Shares of both stocks experienced fluctuations on Tuesday. During a press conference on Monday, President Trump labeled the H20 chip “obsolete” and stated that he would not allow higher-end Blackwell shipments without a significant decrease in performance.

AI chipmakers like Nvidia and AMD consider China a significant market. In earlier remarks, Nvidia CEO Jensen Huang stated that being excluded from the Chinese market would result in a “tremendous loss” for the company. He predicted that the Chinese AI market will exceed $50 billion over the next two to three years.

Over the weekend, a social media account affiliated with Chinese state media claimed that the H20 chips were not safe.

Recent developments suggest potential future deals that could involve similar concessions from chipmakers for access to the Chinese market.