Nvidia's H20 Chips Under Fire In China Over Security Fears As US Export Deal Sparks Backlash: Report

Nvidia Corporation's NVDA H20 artificial intelligence chips are facing mounting security concerns in China, with state media and regulators raising alarms about potential backdoor risks while the U.S. government secures revenue-sharing deals with the chipmaker for export licenses.China Raises Security Concerns Over H20 ChipsNvidia's H20 chips have come under fire in China, with state media and the Cyberspace Administration of China raising alarms about potential security risks, including the possibility of "backdoor" features that could bypass authentication and allow remote access.On Sunday, an article by Yuyuan Tantian, a social media account linked to state broadcaster CCTV, alleged that Nvidia's H20 chips are not only environmentally unfriendly but also potentially unsafe for Chinese consumers, reported Reuters.In the article, Yuyuan Tantian criticized the chips, saying, "When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it."This article followed earlier criticism by the People’s Daily, which called on Nvidia to provide “convincing security proofs” to alleviate concerns over the safety of its chips.Nvidia has vehemently denied the allegations, stating that its products contain no "backdoors" and are built to comply with U.S. regulations.A company spokesperson reiterated that the chips are designed to meet export control laws and that the company has taken steps to ensure security in its products.The US-China Geopolitical Tension And Nvidia’s StrategyNvidia designed the H20 chip specifically for the Chinese market after the U.S. imposed export restrictions on more advanced AI chips in 2023.However, in a reversal of the original ban, the Donald Trump administration allowed Nvidia to resume sales of the H20 chips to China in July 2025, provided the company adhered to certain conditions.These conditions reportedly included Nvidia agreeing to pay 15% of its revenues from chip sales in China to the U.S. government in exchange for the export licenses.Competition And Regulatory Scrutiny Faced By NvidiaDespite the U.S. policy reversal, Nvidia faces increased competition from domestic Chinese chipmakers like Huawei Technologies, Cambricon and Hygon.Analysts predict that Nvidia's share of China's AI chip market will decline in 2025 as local companies aggressively expand.Price Action: Over the last five days, Nvidia's stock has climbed 4.30%, bringing its year-to-date gain to 32.12%, according to Benzinga Pro.Benzinga's Edge Stock Rankings show that NVDA continues to demonstrate a strong upward trend across short, medium and long-term periods, with more detailed performance metrics available here. AMD CEO Lisa Su Says China Strategy Rebounding As MI308 AI Chips Await US License: ‘Better Position Than We Were Ninety Days Ago' Photo by gguy via ShutterstockDisclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.