Nvidia’s H20 Chip Gets Greenlight for China Exports—US Commerce Gives Nod
Silicon diplomacy wins again—Nvidia scores a critical export license for its H20 AI chips to China. The move defies simmering tech cold war tensions, proving even geopolitics bends to the might of semiconductor demand.
Cutting through red tape: The approval signals Washington’s reluctant acknowledgment—China’s AI ambitions can’t be throttled by paperwork. Meanwhile, Wall Street analysts scramble to price in the news, likely overcomplicating what’s simply a play for market share.
Final thought: When chips and cash collide, don’t bet against the house. Nvidia just doubled down.
Security experts warn of risks
The H20 chip has sparked debate among US security officials, who argue that allowing China to acquire it could bolster its military capabilities. Nvidia warns that restricting US technology exports will only accelerate China’s independent innovation.
Last week, the Financial Times reported that 20 security experts—including former Deputy National Security Adviser Matt Pottinger and a recent National Security Council member, David Feith—sent a letter to Commerce Secretary Howard Lutnick urging him to block H20 sales to China. They called the approval a “strategic misstep,” threatening the US’s economic and military advantage in AI.
Nvidia dismissed this criticism as “misguided,” rejecting claims that China WOULD use the H20 to enhance its military power.
The original export restrictions cost Nvidia $4.5 billion in the July quarter, with an additional $2.5 billion in missed sales, surprising the company and its Chinese customers, who had been told business would continue. The ban effectively ended legal sales of Nvidia’s AI chips in China, a market Huang estimates will reach $50 billion in the next two to three years.
Nvidia had forecasted an $8 billion revenue shortfall from China for the July quarter, but was exploring redesigning its AI chips to comply with the new export rules.
Huang has warned that US restrictions risk ceding technological ground to Chinese competitors like Huawei in the global AI hardware race. He noted that Nvidia’s market share in China fell from 95% to 50% over four years as local rivals advanced, calling US export policies a “failure.”
Nvidia pushes back against government surveillance demands on AI chips
Nvidia has pushed back sharply against any government attempts to build surveillance access into its chips, arguing that GPUs must remain free of “backdoors” and remote kill switches. In a Tuesday blog post titled “No Backdoors. No Kill Switches. No Spyware.” Chief Security Officer David Reber Jr. wrote that Nvidia’s GPUs—widely used to train and run AI models across Big Tech and startups—“do not and should not have kill switches and backdoors.”
The stance comes after Chinese officials raised concerns last week about possible “backdoor security risks” in Nvidia’s H20 chips, a version tailored for the Chinese market, and requested a meeting with the company, The New York Times reported. Nvidia warned that permitting covert access or control of its chips would make the technology more vulnerable and would “fracture trust in US technology.”
Big tech firms have previously resisted similar proposals. Apple, for example, has long opposed software backdoors. CEO Tim Cook famously likened them to “the software equivalent of cancer.” The company fought an FBI demand in 2016 to build custom software to unlock a shooter’s iPhone and, earlier this year, resisted what it described as a secret UK government order seeking backdoor access to iCloud data.
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