What exactly is going on with Nvidia in China?
China Translated - Briefing #57
The last few weeks have seen a flurry of dramatic news stories about Nvidia’s situation in China. When there are so many twists and turns for a big topic like this, it’s important to sit down and do a quiet review of what has actually happened, and what is yet to come.
July 15, Lutnick says China is only getting Nvidia’s ‘4th best’ AI chip (CNBC)
Commerce Secretary Howard Lutnick on Tuesday said the Trump administration reversed course on allowing Nvidia to sell its AI chips to China because the U.S. company will not be giving over its best technology.
Lutnick made the remark speaking with CNBC’s Brian Sullivan, saying that Nvidia wants to sell China its “fourth best” chip, which is slower than the fastest chips that U.S. companies use. “We don’t sell them our best stuff, not our second best stuff, not even our third best,” Lutnick said.
July 31, Nvidia summoned by Chinese regulators for “backdoors” (CNBC)
Nvidia has denied that its chips have any “backdoors” that would allow anyone to access or control them, after Chinese regulators summoned officials from the company to explain risks associated with its H20 chip.
While Nvidia was given assurances by Washington that it would be allowed to resume exports of its made-for-China H20 general processing units, the AI chips have attracted increased scrutiny from Beijing.
Aug 10, Chinese state media warned against “backdoors” (CNN)
Nvidia’s H20 chips pose security concerns for China, a social media account linked to Chinese state media said Sunday, as Washington and Beijing near a deadline to strike a deal in trade negotiations in which technology has also emerged as a key issue.
China could choose not to buy US tech firm Nvidia’s H20 chips, said the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, as it claimed that the artificial intelligence (AI) chips could have “backdoors” that impact their function and security.
“When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it,” said the commentary, which came after China’s cybersecurity administration also raised concerns over backdoor access in those chips.
Aug 11, the 15% export tax revealed (The Financial Times)
Nvidia and AMD have agreed to give the US government 15 per cent of the revenues from chip sales in China, as part of an unusual arrangement with the Trump administration to obtain export licences for the semiconductors.
The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, according to people familiar with the situation, including a US official.
The US official said Nvidia agreed to share 15 per cent of the revenues from H20 chip sales in China and AMD would provide the same percentage from MI308 chip revenues. Two people familiar with the arrangement said the Trump administration had not yet determined how to use the money.
Aug 12, China urges firms to avoid H20 chips (Bloomberg)
Beijing has urged local companies to avoid using Nvidia Corp.’s H20 processors, particularly for government-related purposes, complicating the chipmaker’s return to China after the Trump administration reversed an effective US ban on such sales.
Over the past few weeks, Chinese authorities have sent notices to a range of firms discouraging use of the less-advanced semiconductors, people familiar with the matter said. The guidance was particularly strong against the use of H20s for any government or national security-related work by state enterprises or private companies, said the people, who asked not to be identified because the information is sensitive.
Also on The Information and Reuters.
Aug 13, US embeds trackers in AI chip shipments to catch diversions to China (Reuters)
U.S. authorities have secretly placed location tracking devices in targeted shipments of advanced chips they see as being at high risk of illegal diversion to China, according to two people with direct knowledge of the previously unreported law enforcement tactic.
The measures aim to detect AI chips being diverted to destinations which are under U.S. export restrictions, and apply only to select shipments under investigation, the people said.
Aug 15, DeepSeek R2 delayed due to Huawei’s chips? (The Financial Times)
Chinese artificial intelligence company DeepSeek delayed the release of its new model after failing to train it using Huawei’s chips, highlighting the limits of Beijing’s push to replace US technology.
DeepSeek was encouraged by authorities to adopt Huawei’s Ascend processor rather than use Nvidia’s systems after releasing its R1 model in January, according to three people familiar with the matter.
But the Chinese start-up encountered persistent technical issues during its R2 training process using Ascend chips, prompting it to use Nvidia chips for training and Huawei’s for inference, said the people.
Aug 19, new AI chips for China (CNBC)
Nvidia said Tuesday that it is evaluating several products following a report that the company is working on a new artificial intelligence chip for China that is more powerful than the currently available H20.
The new product, tentatively called the B30A, is expected to be based on Nvidia’s Blackwell chip architecture, Reuters reported, citing people familiar with the company’s plans. Nvidia hopes to deliver sample units to Chinese clients for testing as soon as next month, according to Reuters.
Aug 21, China’s backlash against Nvidia’s AI chip seems to be linked to the ‘insulting’ Lutnick remarks (The Financial Times)
Beijing’s move to restrict sales of Nvidia’s China-specific artificial intelligence processor was prompted by remarks from US commerce secretary Howard Lutnick about chip exports that officials found “insulting”.
A group of Chinese regulators have mobilised in an effort to dissuade domestic tech companies from acquiring the H20 — a watered-down processor widely used for artificial intelligence in China.
According to people with knowledge of the regulatory action, the Cyberspace Administration of China (CAC), the National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) moved in response to comments made by Lutnick last month.
“We don’t sell them our best stuff, not our second-best stuff, not even our third-best,” Lutnick told CNBC on July 15, the day after the Trump administration lifted export controls, implemented in April, on H20 sales.
“You want to sell the Chinese enough that their developers get addicted to the American technology stack, that’s the thinking,” he added.
Some of China’s senior leaders found the comments “insulting”, leading the policymakers to seek ways to restrict Chinese tech groups from buying the processors, according to two people with knowledge of the latest regulatory decision-making. As a result, Chinese tech groups held off or significantly downsized their H20 orders, according to those with knowledge of their plans.
Aug 21, DeepSeek teased domestic chip breakthrough (SCMP)
Chinese artificial intelligence start-up DeepSeek said that China will soon have home-grown “next generation” chips for AI stacking, fanning speculation over breakthroughs China may have achieved.
In a one-line note on its official WeChat account explaining the “UE8M0 FP8 scale” of its newly released model V3.1, the Hangzhou-based firm said that the model was particularly designed “for the home-grown chips to be released soon”. It did not specify the vendor of these chips or whether their use would be in the training of AI models or inferencing.
In a technical paper explaining V3.1, which integrates reasoning and non-reasoning modes into one model, DeepSeek said the model was trained “using the UE8M0 FP8 scale data format to ensure compatibility with microscaling data formats”.
The disclosure hints that China has made key progress in building a self-sufficient AI stack consisting of domestic technologies, a development that could help the country shrug off US chip export restrictions.
You may unpack what this might mean by reading this thread by
. You are also encouraged to follow of , who shared on X that he would write a newsletter about this topic soon and that “The major shift is: DS is jumpstarting a *software-led* full-stack AI ecosystem in China US/western AI so far has been entirely *hardware-led* by Nvidia”.
Aug 22, Nvidia orders halt to H20 production (The Information)
Nvidia has told some of its component suppliers to suspend production work related to the H20, its chip tailor-made for the Chinese market, according to two people with direct knowledge of the communications. The directive comes weeks after the Chinese government told local tech companies to stop buying the chips due to alleged security concerns, The Information previously reported.
So, what is really going on here?
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