China Pushes Back After U.S. Official’s Remarks on Nvidia H20 Chips

Tone & Political Bias: Moderately Center-Leaning

Why: The reporting is direct and fact-based. It presents both U.S. and Chinese perspectives without clear favoritism, though it highlights that Lutnick’s remarks triggered Beijing’s response.

What Happened

Chinese regulators are moving to discourage local companies from buying Nvidia’s H20 chip after U.S. Commerce Secretary Howard Lutnick made remarks that Beijing officials considered “insulting,” according to the Financial Times.

The H20 is a less powerful version of Nvidia’s advanced processors, built to comply with U.S. export restrictions. Lutnick dismissed the chip as far below America’s top technology and suggested it was part of a strategy to make Chinese developers reliant on U.S. systems.

Lutnick’s Remarks

During a July 15 appearance on CNBC, Lutnick said that the U.S. does not sell China its best products, or even its second- or third-best. He argued that the U.S. approach was to sell just enough to keep Chinese developers dependent on the American technology stack. His comments came as the Biden administration decided to allow limited sales of the H20 despite earlier restrictions that would have blocked its export.

Beijing’s Response

Beijing’s regulators quickly launched a campaign to reduce demand for the H20 following Lutnick’s comments. Agencies involved include the Cyberspace Administration of China, the National Development and Reform Commission, and the Ministry of Industry and Information Technology.

Chinese officials reportedly saw Lutnick’s remarks as proof that Washington intends to restrict access and maintain long-term dominance in advanced technology. The pressure campaign has already led some Chinese technology firms to scale back orders of the H20, signaling the potential for further declines in U.S. chip sales to China.

Impact on Nvidia

Shares of Nvidia dipped less than 1% in early trading on Thursday following the news. The company has become a central supplier in the artificial intelligence race, with its chips widely seen as the most advanced in the market. The pushback in China adds to the growing challenges Nvidia faces as it tries to maintain access to one of its largest markets while navigating U.S. restrictions and geopolitical tensions.

Industry Context

The dispute highlights the broader competition between the United States and China in advanced technology. Nvidia’s chips are crucial for powering artificial intelligence models, making them a highly sensitive product in the global market.

In Washington, critics argue that even scaled-down products such as the H20 could still help China advance its AI capabilities. To secure export licenses, Nvidia and fellow chipmaker AMD have agreed to pay 15% of their China-related chip revenue to the U.S. government.

Stakeholder Positions

Nvidia has stressed that the H20 is not intended for military or government use but is designed for commercial markets. The company noted that just as the U.S. would not rely on Chinese chips for government infrastructure, Beijing would not rely on American chips for its own state systems.

Chinese regulators, however, view Lutnick’s comments as justification to accelerate efforts to build up domestic chip suppliers and cut reliance on U.S. technology. The U.S. Commerce Department has not commented on the controversy.

Why It Matters

The situation underscores how fragile U.S.-China trade relations remain despite ongoing negotiations. China’s efforts to sideline the H20 could speed up its push to develop homegrown semiconductor capabilities, which has long been a national priority.

For U.S. firms like Nvidia, the episode serves as a reminder of the risks of depending heavily on the Chinese market at a time of heightened scrutiny and intensifying competition in artificial intelligence.