Beijing has launched a regulatory push to restrict domestic technology groups from purchasing Nvidia’s China-specific artificial intelligence chip, the H20, after U.S. commerce secretary Howard Lutnick made comments that senior Chinese officials deemed “insulting,” the Financial Times reported.
According to the paper, multiple Chinese regulators — including the Cyberspace Administration of China (CAC), the National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) — have moved to discourage companies such as Alibaba and ByteDance from acquiring the H20 processor.
The move follows Lutnick’s remarks to CNBC last month, in which he said the U.S. does not sell China its best or even “third-best” chips, but enough to keep Chinese developers reliant on American technology. Sources told the Financial Times that Beijing policymakers were angered by the comments, prompting informal guidance to halt or scale back orders for the H20.
The actions mark a setback for Nvidia, which dominates the global AI chip market but is barred from selling its most advanced products in China. Nvidia’s CEO Jensen Huang visited Beijing in July, seeking to maintain the company’s foothold in the market. His trip initially generated optimism, leading Nvidia to restart H20 production with chipmaker TSMC.
However, China’s regulators have since ramped up efforts to promote domestic chipmakers such as Huawei and Cambricon. The CAC reportedly summoned Nvidia executives over alleged “security issues” and claimed its chips contained tracking and shutdown features — accusations strongly denied by the company. Meanwhile, the NDRC reinforced calls for greater chip independence, asking companies to avoid Nvidia’s products altogether.
While China’s commerce and foreign ministries had been more welcoming of Nvidia, particularly amid ongoing trade talks with Washington, the diverging signals highlight the tensions between economic diplomacy and technological self-sufficiency.
Analysts note that some Chinese tech firms are delaying purchases to see if Washington approves exports of a new, downgraded Blackwell processor, which could outperform the H20. Yet with domestic chip capacity still limited until at least next year, Beijing faces a delicate balancing act between supporting homegrown alternatives and meeting immediate AI development needs.
China’s foreign ministry reiterated its stance that “science, technology, and economic and trade issues should not be politicised, instrumentalised, or weaponised,” warning that containment “will not hold back China’s development,” according to the Financial Times.
