Nvidia Asks Suppliers to Halt H20 Work, Information Says

Nvidia CEO Jensen Huang.

(Bloomberg) -- Nvidia Corp. has instructed component suppliers including Samsung Electronics Co. and Amkor Technology Inc. to stop production related to the H20 AI chip, the Information reported, citing unidentified sources.

Nvidia issued those orders this week after Beijing urged local companies to avoid using the H20, the Information said, referring to a chip designed specifically for the Chinese market.

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A production suspension would raise questions about fundamental demand for the H20, a less-powerful version of Nvidia’s cutting-edge AI accelerators that competes with capable chips from the likes of Huawei Technologies Co. and Cambricon Technologies Corp.

Nvidia and Advanced Micro Devices Inc. both recently secured Washington’s approval to resume lower-end AI chip sales to China, on the controversial and legally questionable condition that they give the US government a 15% cut of the related revenue.

But their Chinese customers are under pressure to adopt homegrown chips instead — part of a broader objective to build a world-class domestic industry and wean the country off US technology.

In past weeks, Chinese authorities have sent notices to a range of firms discouraging use of the less-advanced semiconductors, Bloomberg News has reported. That followed warnings about alleged security risks in the H20 chips, after Washington officials said they were considering ways to equip chips with better location-tracking capabilities.

Nvidia — which is due to report earnings next week — has repeatedly denied it builds such features or backdoors into its product. Representatives for Amkor didn’t immediately respond to requests for comment after normal hours. A Samsung representative declined to comment.

“We constantly manage our supply chain to address market conditions,” an Nvidia spokesperson said.

“As both governments recognize, the H20 is not a military product or for government infrastructure. China won’t rely on American chips for government operations, just like the US government would not rely on chips from China. However, allowing US chips for beneficial commercial business use is good for everyone.”

It’s unclear whether the Information’s story relates to new production of the H20 or stockpiles of unfinished AI accelerators. Semi-finished semiconductors are “piling up” at Amkor, which packages chips for customers like Nvidia, the Information reported.

Story Continues

Nvidia, which wrote off $5.5 billion of H20 chips for China after the Trump administration decided to ban the product, is still sitting on unsold inventory. Chief Executive Officer Jensen Huang has said the US reversal of that ban over the summer could help Nvidia recover some but not all of that writedown.

--With assistance from Nick Turner, Yoolim Lee and Debby Wu.

(Updates with Nvidia’s response and context from the fourth paragraph)

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