NVIDIA’s H20 chip’s return to the Chinese market has been met with twists and turns. Chinese state media continuously claims that the H20 chip can achieve “remote shutdown” functionality, while NVIDIA once again denies these allegations. Analysts suggest that the Chinese government’s attitude towards NVIDIA is a strategic move to create controversy in order to acquire higher-level chips. Commentators note that NVIDIA finds itself walking a tightrope between the US and China, with little room for maneuvering. It is essential for the US and the West to rethink their competitive strategies with China, acknowledging the risks involved and approaching the situation cautiously to ensure security.
According to reports by Chinese state media under CCTV, the H20 chip from NVIDIA can completely achieve “remote shutdown” functionality, including setting voltage levels and timers for automatic chip shutdown. The article claims that the H20 chip is “neither environmentally friendly, nor advanced, nor secure,” and encourages Chinese consumers to choose not to purchase it.
In response, NVIDIA stated today that cybersecurity is crucial for the company and that their chips do not contain backdoors that allow remote access or control.
Earlier, on July 31, China’s Cyberspace Administration of China called NVIDIA to explain the security risks related to backdoors in the H20 chip and requested relevant documents.
On August 1, an NVIDIA spokesperson stated, “Cybersecurity is crucial to us, NVIDIA’s chips do not have a ‘backdoor’ that allows remote access or control.”
Subsequently, the People’s Daily published a commentary article titled “NVIDIA, how can I trust you” in early August, questioning NVIDIA’s response to the H20 chip. The commentary expressed doubts about the tracking and remote shutdown capabilities of the H20 chip, urging the company to provide convincing security evidence as requested during the meeting.
Addressing these accusations, NVIDIA’s Chief Security Officer David Reber stated on August 5 that the company’s GPUs should not have “remote shutdown” or “backdoor” issues, emphasizing that backdoors are dangerous vulnerabilities that could be exploited not only by government officials but also hackers, which would violate fundamental principles of cybersecurity.
From August 1 to August 11, NVIDIA has responded for the third time to the backdoor allegations regarding the H20 chip, reiterating that their chips do not have backdoors, termination switches, or monitoring software.
During the Biden administration, the US limited the sale of cutting-edge chips by NVIDIA to China citing national security reasons. The H20 chip was specifically produced for the Chinese market and falls under the category of “low-end within high-end.” However, even this chip was later banned by the Trump administration.
In April of this year, the US government prohibited the sale of H20 chips to the Chinese market. To regain chip sales, Huang Renxun spent months lobbying in Washington. On July 10, Huang Renxun met with President Trump at the White House, asserting that the US should not hand over the vast Chinese market to local competitors and emphasizing that US chips should become the global standard. Eventually, Trump agreed to allow NVIDIA to reintroduce the downgraded H20 chip to the Chinese market.
Behind the lifting of the ban, progress in US-China negotiations played a significant role. US Secretary of Commerce Lutnick stated that China recently agreed to supply rare earth magnets, and Washington is willing to release some chip exports to maintain its technological dominance in the Chinese market.
Just days after his meeting with Trump, in mid-July, Huang Renxun visited China for the third time that year and announced in Beijing that most of NVIDIA’s inventory is expected to be restored, promising accelerated shipments in the coming months. However, within just two weeks, the Chinese government raised concerns.
Prior to the Cyberspace Administration of China summoning NVIDIA, the Ministry of State Security of China had previously stated on July 21 that chips, smart devices, and software produced overseas contain “backdoors,” urging domestic “sensitive units” to use domestic chips and systems.
Su Ziyun, Director of Strategy and Resources Institute at the Taiwan Institute for National Defense Security, stated to Dajiyuan that Beijing considers the H20 chip as a bargaining chip in negotiations. Beijing is not satisfied with the basic performance of the H20 chip, thus highlighting specific settings to interpret it as a security issue, with the aim to leverage NVIDIA to communicate with the White House, hoping to access higher-level chips through this gateway.
Su Ziyun explained that from a chip design perspective, Beijing’s argument for backdoors has theoretical validity. While chips have self-protection mechanisms in their hardware design, akin to a safety switch at home that trips when overloaded, this possibility is relatively high. However, there appears to be conflicting narratives with NVIDIA asserting that there are no backdoors.
Su Ziyun believes that it is unlikely for NVIDIA to embed such backdoor programs, especially when the Chinese government itself is knowledgeable about backdoor programs, which they can use for inspection or border management and only allow those deemed appropriate.
Despite the availability of alternative products from Huawei, NVIDIA continues to enjoy popularity in China.
The H20 chip is tailor-made by NVIDIA for the Chinese market, developed based on the NVIDIA Hopper architecture, utilizing advanced CoWoS packaging technology. While it may be slightly inferior in performance compared to the H100 chip, the H20 chip remains competitive in specific application scenarios. Particularly in large-scale inference and training, the H20 chip meets the fundamental requirements of Chinese companies in the field of artificial intelligence.
Chinese AI companies such as DeepSeek and Alibaba Cloud have shown significant demand for the H20 chip. Prior to the implementation of the ban in April, major Chinese tech giants such as Tencent, ByteDance, and Alibaba significantly increased their orders for H20 chips for AI model deployment.
Currently, China is heavily reliant on NVIDIA chips, making it challenging to assuage doubts under the guise of security risk assessment.
Some overseas netizens have mocked China for crying wolf, while others have criticized NVIDIA for not being tough enough, suggesting that the company should immediately cease production and stop selling. A netizen aptly pointed out that China’s questioning of the security of the H20 chip aims to compel Huang Renxun to clarify the working principles, potentially facilitating intellectual property theft.
Moreover, apart from challenges in the Chinese market, NVIDIA faces obstacles within the US as well.
On July 11, the day before Huang Renxun’s visit to China, Republican Senator Jim Banks and Democratic Senator Elizabeth Warren jointly wrote to Huang Renxun, emphasizing that he should not engage with entities cooperating with the Chinese military or intelligence agencies and those companies already restricted for export by the US.
Furthermore, some former senior US officials have warned that permitting NVIDIA to sell chips to China could lead to irreversible dominance by Chinese companies in the field of artificial intelligence.
On July 28, twenty prominent US national security experts, including former National Security Advisor Matt Pottinger from Trump’s first term, collectively wrote to US Secretary of Commerce Holtzneck protesting the approval of NVIDIA’s chip sales to China.
Their argument stems from the belief that the H20 chip is not a standard chip but an “advanced AI accelerator” that could help China rapidly catch up with or even surpass US AI technology, deliberately designed to circumvent export restrictions and specifically enhanced for AI inference capabilities. Once China gains access to this technology, the US could potentially lose its AI advantage, with Chinese military applications potentially exploiting the technology for military purposes.
In June, Reuters reported US officials accusing Chinese AI company DeepSeek of assisting the Chinese military and intelligence agencies and attempting to circumvent US chip bans through shell companies.
Even though the current H20 chip does not have remote shutdown capabilities, NVIDIA may be required in the future by the US government to equip higher-level chips with this functionality.
In May of this year, Senator Tom Cotton introduced the “Chip Security Act,” requiring the Department of Commerce to mandate that export-restricted AI chips include a location verification mechanism to detect chip relocation, smuggling, or other unauthorized use. On July 17, the US House of Representatives China Task Force reiterated the importance of this legislation.
Xie Peixue, Deputy Researcher at the Taiwan Institute for National Defense Security, previously stated in an interview with New Tang Dynasty TV that the risk raised by the Chinese government does not currently exist, as it stems from a proposal stage US bill, the Cotton Act, which may pose future risks. It is evident that China is linking unclear product defects with geopolitical considerations, using sovereign oversight powers to exert pressure on NVIDIA and the US government.
Xie Peixue mentioned that in the new Cold War, economic or technological security is equivalent to national security. In the future, NVIDIA must navigate between the US and China carefully, as its room for maneuvering diminishes.
NVIDIA faces other risks in China as well. At the end of last year, China’s State Administration for Market Regulation announced an investigation into NVIDIA for allegedly violating China’s anti-monopoly laws.
Commentator Li Lin remarked that NVIDIA is walking a tightrope between the US and China, faced with a challenging situation where it must comply with US government regulations while gaining the trust of the Chinese Cyberspace Administration. A misstep could make NVIDIA unacceptable on both fronts, especially given the inconsistency of the Chinese government.
He emphasized that China is an expert in spy software, carrying out increasingly aggressive cyber warfare attacks against the West via networks. While the West seems to treat Chinese companies similar to domestic ones with a competitive coexistence mindset, this attitude could be detrimental. The US and the West need to change their approach in competition with China, recognizing the risks involved and proceeding with caution to ensure safety.