Chinese regulators are signaling caution but not an outright ban on Nvidia’s (NASDAQ:NVDA) H20 AI chip.
Reuters reports the Cyberspace Administration of China and other agencies recently called in Tencent (TCEHY), ByteDance, Baidu (NASDAQ:BIDU), and others, pressing them to justify why they need the U.S.-made chips instead of local options, while voicing worries that data shared for U.S. export clearance could expose sensitive client information.
The companies haven’t been ordered to stop buying, pushing back on earlier reports of a ban. Still, Bloomberg says officials advised against using H20 chips in government-linked projects, and The Information claimed some firms were told to pause purchases though Reuters couldn’t confirm that.
The distinction is key for Nvidia, which only regained the right to sell the H20 in China last month after U.S. curbs eased. The chip was custom-built for China after 2023 restrictions and delivered $17 billion in China sales last fiscal year, 13% of Nvidia’s total.
Yet the pressure comes as Huawei and others ramp up domestic AI chip efforts, and Beijing pushes its tech giants to cut reliance on U.S. suppliers.
This article first appeared on GuruFocus.