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Nvidia Halts China Chip Production, Reports Say

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Nvidia (NVDA) reportedly has told suppliers to suspend production of its H20 chip, after Beijing asked local firms to avoid using the chip tailored for the Chinese market due to security concerns.

Citing unidentified sources, The Information reported that Nvidia has instructed Samsung Electronics and Amkor Technology to halt production of the H20 chip, which are less powerful than its latest semiconductors. Reuters separately reported that Nvidia had asked Foxconn to suspend work related to the H20 chips. Foxconn, Samsung, and Amkor didn’t immediately respond to requests for comment.

“We constantly manage our supply chain to address market conditions,” an Nvidia spokesperson told Investopedia.

Last month, Nvidia and rival Advanced Micro Devices (AMD) were given approval from the Trump administration to resume sales of key AI chips to China, with the condition that they pay 15% of their chip revenue generated there to the U.S. government in exchange for the export licenses. Beijing reportedly has raised concerns that the Nvidia chips contained “backdoors,” allowing remote access to or control of the chips, a charge the tech firm has denied.

“As both governments recognize, the H20 is not a military product or for government infrastructure. China won’t rely on American chips for government operations, just like the U.S. government would not rely on chips from China,” the Nvidia spokesperson said. “However, allowing U.S. chips for beneficial commercial business use is good for everyone.”

The spokesperson added, “Cybersecurity is critically important to us. NVIDIA does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them. The market can use the H20 with confidence.”

China is a key market for Nvidia. The chipmaker said in May that it took a $4.5 billion charge in the first quarter due to export curbs on H20 chips to the Asian country.

Nvidia shares, which entered Friday up 30% this year, were down about 1% in premarket trading.

–Nisha Gopalan

Futures Point to Slightly Higher Open for Major Indexes

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Futures tied to the Dow Jones Industrial Average were up 0.3%.

S&P 500 futures added 0.2%.

Nasdaq 100 futures also rose 0.2%.