Recently, the Beijing authorities have accused NVIDIA of security risks associated with its H20 chip, alleging that it could be controlled and tracked remotely through backdoor programs. NVIDIA has strongly denied these allegations, prompting the Chinese Communist Party (CCP) to demand comprehensive information regarding the H20 chip from NVIDIA. Analysts suggest that the CCP’s actions may aim to obtain the relevant technology of the H20 chip, or it could be a way to express dissatisfaction and pressure NVIDIA in an attempt to access more advanced chips.
The Cyberspace Administration of China accused NVIDIA on July 31, demanding explanations regarding the “vulnerabilities and backdoor security risks” in the H20 chip and requesting submission of relevant proof. Official media outlets even claimed that the H20 chip could easily achieve “remote shutdown” functions, including setting voltage and timing conditions for automatic chip shutdown.
NVIDIA remains steadfast in refuting these accusations, asserting that there are no backdoors in the chip that would allow anyone remote access or control.
In early August, CCP party media People’s Daily published a commentary titled “NVIDIA, how can I trust you?” questioning NVIDIA’s response.
Observing the workings of the CCP regime, its claims often carry other intentions. The regulatory agencies and official media accusing NVIDIA could be a response to the pending US Senate’s “Chip Security Act,” but experts believe that Beijing has ulterior motives behind its actions.
According to analysis by The Daily Signal, the CCP is known to acquire foreign critical technologies through various means. For instance, a US chemical manufacturer, Huntsman, faced demands from Chinese government agencies during operating license reviews to share sensitive technological information, leading to Chinese chemical competitors utilizing Huntsman’s technology.
By demanding NVIDIA to submit information on the H20 chip, China likely targets crucial technologies like chip design and manufacturing.
Director of Strategic Resources at Taiwan’s Institute for National Defense and Security Studies, Su Zi-Yun, told Epoch Times that Beijing is treating the H20 chip as a bargaining chip. Unsatisfied with the basic performance of the H20 chip, Beijing is picking on settings within it, framing it as a security issue to pressure NVIDIA to engage with the White House and hopefully gain access to more advanced chips.
Since 2015, the CCP views semiconductors as a key battleground in the strategic competition between China and the US, having invested billions in companies like Huawei and SMIC, prioritizing chip design and manufacturing.
Currently, China is rapidly expanding its mature process chip production (older generation chips, 28 nanometers and above) to seize global markets at low prices. These mature processes are over a decade old and are simpler compared to chips used in AI devices.
According to market research consultancy IDC, China’s global production capacity share for mature process chips is projected to grow from about 28% in 2025 to 39% in 2027.
Chairman of the House China Commission, John Moolenaar, stressed that China’s aggressive entry of low-cost mature process chips into the market could lead to increased reliance on China in US supply chains, posing a national security threat.
Moolenaar likened this tactic to the “Huawei model,” where the government subsidizes production at below-market prices, expands capacity significantly, floods the global market with excess supply, and eventually eliminates competitors to control key supply chains.
Currently, Chinese manufacturers have yet to master advanced chip processes, in which NVIDIA maintains a significant advantage. Hence, many Chinese companies, especially in the AI sector, heavily rely on NVIDIA chips.
NVIDIA is now treading carefully between the US and China. China remains a significant market for NVIDIA, with revenues from the China market accounting for approximately 13% of NVIDIA’s total earnings in the 2025 fiscal year.
Former President Trump confirmed on Monday that he had reached an agreement with NVIDIA CEO Jensen Huang to allow the company to sell the H20 chip in China and pay 15% of the sales revenue to the US government. Congressional members have expressed concerns over this decision.
Chairman of the House China Commission, John Moolenaar, emphasized that export controls are the first line of defense for protecting national security. He stated that issuing licenses permitting the sale of technology that could bolster China’s AI capabilities should not set a precedent.
Democratic member of the commission, Raja Krishnamoorthi, pointed out that attaching a price tag to national security concerns sends a signal to China and US allies that American national security principles can be negotiated with money.
Long accustomed to using joint ventures, restrictions on foreign ownership, or administrative procedures like reviews and licensing to force technology transfers from foreign enterprises, the CCP may exploit NVIDIA’s desire to capture the Chinese market by exerting various pressures.
Therefore, The Daily Signal recommends that the Trump administration firmly convey to Beijing that any demands forcing technology transfer from NVIDIA are intolerable. Strict safeguards against forced technology transfers must also be incorporated into trade agreements with China.