Nvidia is set to increase sales of its H20 chips in China soon. Recently, Nvidia faced questioning from the Cyberspace Administration of China regarding the security of these chips and the possibility of remote backdoors.

In response, Nvidia stated:

“Nvidia does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them.”

This statement is significant due to heightened concerns in the US regarding China’s increasing technological capabilities, particularly in AI. The H20 chips are designed in compliance with US export laws, aimed at minimizing potential security breaches related to the technology’s use in China.

Despite recent clearance from US authorities regarding their sale, Nvidia’s market play in China remains under scrutiny. Analysts predict that the growing domestic competition could hurt Nvidia’s market share. As analyst Charlie Dai noted:

“The CAC’s scrutiny over H20 security risks could further erode Nvidia’s Chinese market share amid rising domestic competition.”

Furthermore, the current atmosphere of technological mistrust, intensified by a US politician’s proposal to introduce tracking mechanisms in all Nvidia GPU exports to China, raises further questions about the future of Nvidia’s partnership and sales within the Chinese market.

The H20 represents one of the most advanced AI chips available to Chinese companies legally. It has become crucial for Nvidia to maintain a robust presence in the competition for AI supremacy, emphasizing the need for clarified regulations surrounding their technology exports.