China cites ‘backdoor safety risk' in Nvidia's H20 AI chip; company denies allegation

Yahoo

2 days ago

Chinese authorities have summoned U.S. chip giant Nvidia Corp. over alleged security vulnerabilities in its H20 processor, a move that could complicate the company's efforts to re-enter the Chinese market just as Washington and Beijing struggle to make progress on a renewed trade truce.
The Cyberspace Administration of China (CAC) called Nvidia representatives to a meeting to discuss 'serious security risks' tied to its H20 AI chip, Bloomberg reported, citing a statement from the internet watchdog.
The agency pointed to comments from U.S. lawmakers advocating for tracking capabilities in advanced chips sold overseas, and asked Nvidia staff to explain potential vulnerabilities and provide supporting documentation.
The probe casts a shadow over Nvidia's China business weeks after co-founder and CEO Jensen Huang visited Beijing and met with local AI firms and officials.
While the company has denied any wrongdoing, saying its chips do not contain so-called 'backdoors', the timing of the investigation has raised eyebrows in the tech and policy communities.
Security doubts cloud comeback
'The CAC's scrutiny over H20 security risks could further erode Nvidia's Chinese market share amid rising domestic competition, and immediate H20 sales resumption may face delays due to regulatory uncertainty,' Forrester analyst Charlie Dai told Bloomberg.
'It also aligns with China's broader push to accelerate domestic semiconductor alternatives for technological self-reliance amid U.S. export controls.'
The H20 chip was designed specifically to comply with U.S. export restrictions on advanced semiconductors. Washington recently lifted some of those curbs, reportedly in return for increased access to Chinese rare earth minerals, just as trade talks in Stockholm aimed to extend a temporary tariff truce.
While those negotiations were described as 'constructive,' no concrete resolution emerged. U.S. Commerce Secretary Howard Lutnick had framed the resumption of H20 sales as a breakthrough following earlier discussions in London, a claim that now appears increasingly uncertain.
Domestic rivals gain ground
The CAC's move also boosts local competitors. Huawei's Ascend 910C chip is now seen as a viable domestic alternative to the H20, particularly for inference workloads.
According to Bloomberg, Huawei Technologies Co. now spearheads a nationwide effort to develop homegrown technologies to reduce China's reliance on American hardware and circuitry, and catch the U.S. in potentially game-changing technologies.
Nvidia, meanwhile, reiterated in a statement that 'cybersecurity is critically important to us' and denied any claims of remote access or tracking features. 'Nvidia does not have 'backdoors' in our chips that would give anyone a remote way to access or control them,' the company said.
As both countries tiptoe through fragile trade negotiations and navigate semiconductor nationalism, Nvidia's experience could signal deeper fault lines in tech diplomacy.
While the H20 was initially hailed as a compromise chip to satisfy both regulators and customers, its future now hinges on a political equation that continues to shift.
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