Nvidia has directed its suppliers to stop work on the H20 AI chip designed specifically for the Chinese market, according to a report by The Information. This move comes amid tightening export restrictions placing limitations on advanced semiconductor sales to China, reflecting growing geopolitical and regulatory challenges impacting tech supply chains.
The H20 chip, intended as a slightly downgraded version of Nvidia’s top-tier AI processors, was developed to cater to China while navigating U.S. export controls that prohibit the sale of the company’s most advanced chips there. Nvidia had partnered with key suppliers such as Samsung, responsible for high-bandwidth components, and Amkor Technology, providing sophisticated chip packaging, to produce the H20.
However, recent orders from Nvidia have instructed these suppliers to halt production and assembly work related to the H20 chip, leading to a buildup of inventory at these manufacturing partners. This strategic pause largely stems from increasing pressure by Chinese regulatory agencies—including the Cyberspace Administration of China (CAC) and the National Development and Reform Commission (NDRC)—that have begun enforcing stricter export licensing requirements on semiconductor technology products.
These Chinese agencies appear to be encouraging domestic companies to reject reliance on foreign AI chips like Nvidia’s H20, instead accelerating the drive to develop indigenous semiconductor capabilities. Factory lines and suppliers are consequently caught in the middle of navigating these competing political and commercial demands.
The halt follows reports that Chinese firms using the initial shipments of H20 chips faced a significant financial burden, reportedly paying up to 15% of revenues tied to those chips. This has further discouraged continued engagement with Nvidia’s products under the current export and import environment.
Industry analysts suggest this development is emblematic of the wider decoupling trend between U.S. and Chinese technology ecosystems, sparked by trade tensions and national security concerns around advanced computing technology. Nvidia’s decision highlights the operational complexities and risks global semiconductor suppliers face amid such tightening enforcement.
The impacted suppliers Samsung and Amkor declined immediate comment on the status of the H20 chip production line halt. Nvidia has yet to issue a public statement responding directly to the report.
Experts note that the move could delay China’s AI advancement ambitions, at least in the near term, as domestic solutions are still maturing. Meanwhile, Nvidia and other U.S.-based chipmakers continue to balance commercial interests with mapping compliance to evolving export control frameworks.