China has moved to restrict sales of Nvidia’s China-specific H20 artificial intelligence chip in the country, following remarks from U.S. Commerce Secretary Howard Lutnick that it found “insulting,”.
According to the Financial Times, the Cyberspace Administration of China, the National Development and Reform Commission, and the Ministry of Industry and Technology had begun dissuading local companies from buying the H20 in response to comments from Lutnick in July.
Lutnick Comments
The comments in question were made by Lutnick in a CNBC interview on July 15, which took place a day after the Trump administration lifted restrictions on the sales of some AI chips in China.
“We don’t sell them our best stuff, not our second-best stuff, not even our third-best,” Lutnick had told CNBC. “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 had found the comments “insulting,” leading to efforts to restrict Chinese tech firms from buying the chips.
Resumption of AI Chip Sales
The US had allowed the resumption of Nvidia H20 sales in China after reaching a framework trade deal with Beijing in May and June. In return, China had also resumed exports of rare earth materials.
China in late-July however begun guiding Chinese tech firms to halt new orders for the H20, while also promoting the use of locally-made chips, such as from Huawei.
The Chinese Government had also expressed concerns over remote controls and security lapses in U.S.-made chips– claims that Nvidia has strongly disputed.
China represents at least 15% on Nvidia’s overall sales, with the H20 chips being wildly popular among local AI developers with major firms such as Alibaba, Baidu, and Bytedance pushing back against China’s promotion of locally made AI chips, citing better performance from Nvidia chips.