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\n In a surprising reversal of the United States\u2019 years-long technology restrictions on China, President Donald Trump last month allowed Nvidia to resume sales of a key AI chip<\/a> designed specifically for the Chinese market.\n <\/p>\n \n Yet rather than celebrating, Beijing\u2019s response has been noticeably lukewarm, despite having long urged Washington to ease the stringent export controls. In the weeks since the policy U-turn, Beijing has called the chip a security risk<\/a>, summoned Nvidia for explanations and discouraged its companies from using it.\n <\/p>\n \n The less-than-welcoming sentiment reflects Beijing\u2019s drive to build a self-sufficient semiconductor supply chain \u2013 and its confidence in the progress its rapidly advancing chip industry has made.\n <\/p>\n \n But the cold shoulder may also represent some political posturing. Despite significant advances in its semiconductor sector, China still needs America\u2019s chips and technology. Experts said China\u2019s national champion Huawei has developed chips with performance comparable to \u2014 and in some cases surpassing \u2014 the newly approved Nvidia chip. However, China still wants the more advanced AI processors that remain blocked under US export controls.\n <\/p>\n \n In the years since Trump first imposed tech restrictions on Huawei during his first term, China\u2019s chip technology has made significant strides, spurred by the frustration that mounted as Washington piled on export controls, said Xiang Ligang, director-general of a Beijing-based technology industry group and an advisor to the Ministry of Industry and Information Technology.\n <\/p>\n \n \u201cWe have this capability, it\u2019s not as they imagine \u2013 that if China is blocked, China won\u2019t be able to function, or that China will be finished,\u201d he said.\n <\/p>\n \n To him, the policy about-face only reflects the importance of having a wholly homegrown chip supply chain.\n <\/p>\n \n \u201cFor Chinese companies, we may only have one choice if we wish to ensure a relatively secure supply of chips \u2013 that means relying on our own domestically produced chips,\u201d Xiang said.\n <\/p>\n \n That may be China\u2019s goal, but in the high-stakes AI race, with all its national security implications, the US remains the leader, at least for now.\n <\/p>\n \n The chip in focus is Nvidia\u2019s H20, which was released by the AI chip leader last year to maintain access to the Chinese market following strict export controls<\/a> put in place under the Biden administration that stopped the export of chips with high processing power.\n <\/p>\n \n Last month, Trump greenlit the sales of the chip to China after banning it in April as the US trade frictions with China deepened.\n <\/p>\n \n Trump has justified his decision by calling the chip \u201cobsolete,\u201d<\/a> as it lags behind the company\u2019s cutting-edge AI processors like Blackwell or H100, from which H20 is derived. He and his officials appeared to have embraced a view long promoted by Nvidia\u2019s CEO Jensen Huang \u2013 that US can maintain its tech leadership only through ensuring its chips remain the global standard.\n <\/p>\n \n \u201cYou want to sell the Chinese enough that their developers get addicted to the American technology stack,\u201d Commerce Secretary Howard Lutnick said last month.\n <\/p>\n \n But the dramatic reversal has fueled questions about Trump\u2019s transactional approach to national security \u2013 once considered off-limits to bargaining.\n <\/p>\n \n China, on the other hand, is alarmed by the alleged security risks<\/a> of Nvidia\u2019s H20s like \u201ctracking and positioning\u201d and \u201cremote shutdown\u201d features, capabilities that some US lawmakers have called for but Nvidia denies it has placed in its chips.\n <\/p>\n \n China\u2019s cyberspace watchdog and industry ministry have since summoned the American chip giant over the security concerns and urged firms to avoid H20 chips, a development which was previously reported by Bloomberg<\/a>.\n <\/p>\n \n One major Chinese tech company which has developed its AI models has received notice from the authorities urging it to exercise caution in the use of H20s, and advising it not to purchase them, a company insider said on the condition of anonymity.\n <\/p>\n \n CNN has reached out to the ministry and the cyberspace authorities for comment.\n <\/p>\n \n An Nvidia spokesperson told CNN that NVIDIA \u201cdoes not have \u2018backdoors\u2019 in our chips that would give anyone a remote way to access or control them.\u201d\n <\/p>\n \n \u201cBanning the sale of H20 in China would only harm US economic and technology leadership with zero national security benefit,\u201d the spokesperson added.\n <\/p>\n \n But China believes the US isn\u2019t playing fairly, Xiang said.\n <\/p>\n \n \u201cWhat we actually want, you refuse to sell us. For the things you already consider obsolete, you still want to dump them into our market and occupy our market. Do you really think we\u2019re that naive?\u201d he said.\n <\/p>\n \n Despite Beijing\u2019s concerns and the H20\u2019s reduced performance, the chips remain highly sought after by Chinese companies.\n <\/p>\n \n Equity research firm Bernstein estimated that shipment of the chips to China this year would have reached 1.5 million units, or about 23 billion in revenue, without Trump\u2019s export restrictions. Major buyers include Chinese tech giants such as TikTok owner ByteDance, Alibaba and Tencent.\n <\/p>\n \n While Huawei\u2019s top AI chips excel in computing power \u2013 one of the key measures in evaluating processors\u2019 performance \u2013 in comparison with H20, they fall short in terms of memory bandwidth, which determines how much data can move between a chip\u2019s memory and computing unit.\n <\/p>\n \n That bandwidth depends on a technology known as High Bandwidth Memory (HBM<\/a>) used in AI chips to ensure efficient data transmission in AI model training.\n <\/p>\n \n China\u2019s top HBM maker CXMT, or ChangXin Memory Technologies, is still about three to four years behind industry leaders like South Korea\u2019s SK Hynix and Samsung<\/a>, and American Micron, according to MS Hwang, research director at Counterpoint Research, a research firm.\n <\/p>\n \n Last year, the Biden administration further tightened export controls<\/a> on China, including restrictions on HBM sales, forcing Chinese companies to rely on existing stockpiles.\n <\/p>\n![\"Nvidia](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/gettyimages-2192224062.jpg\")
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