Nvidia’s efforts to revive its foothold in China took a hit on Thursday after Beijing summoned the U.S. chip giant over what it claimed were “serious security issues” tied to its made-for-China artificial intelligence chips.
The move by China’s cyberspace watchdog, the Cyberspace Administration of China (CAC), throws a fresh shadow over Washington’s recent easing of export restrictions on Nvidia’s H20 chip, a product redesigned to comply with U.S. rules.
In a statement, the CAC alleged that U.S. AI experts had exposed alarming capabilities within Nvidia’s hardware — including built-in location tracking and remote shutdown functions — prompting a formal summons to the company for explanation and documentation. Beijing’s regulators did not specify which experts made the discovery, nor did they cite any verification by Chinese authorities. Nvidia has not publicly responded.
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The H20 chip, part of Nvidia’s Hopper architecture, was introduced as a compromise to stay within the bounds of U.S. export curbs, which were tightened to block China’s access to advanced semiconductors seen as critical to AI and military development. Earlier this month, the Trump administration approved H20 exports to China, a move that was met with backlash in Washington over fears the sales would bolster Beijing’s AI capabilities.
Nvidia CEO Jensen Huang had swiftly followed up on the policy shift by visiting Beijing, meeting with Chinese officials and clients in a bid to reassure the government of the company’s commitment to the market. During his trip, Huang also unveiled a GPU based on the latest Blackwell series, tailored to meet U.S. compliance standards while still serving Chinese demand.
But the CAC’s surprise intervention suggests Nvidia’s path to rebuilding in China may be fraught with internal resistance. The timing — coming just weeks after Washington relaxed its position — raises questions over whether Beijing truly welcomes the re-entry of U.S. chip giants, or whether it is leveraging regulatory pressure to accelerate the growth of its domestic semiconductor industry.
Indeed, Beijing has quietly encouraged its tech sector to reduce dependence on foreign chipmakers like Nvidia and instead ramp up purchases from domestic alternatives. Huawei, along with emerging Chinese chip firms such as Biren and Cambricon, has benefited from this push to localize the AI hardware supply chain. These companies stand to gain further if Nvidia’s market access is obstructed again.
Adding to the uncertainty, Nvidia has stated that it will take approximately nine months from restarting production to begin shipping the H20 to Chinese customers. But industry insiders say some buyers remain hesitant, unsure whether the U.S. might reverse course under political pressure. That fear is not unfounded. In Washington, lawmakers have floated legislation that would mandate chipmakers embed tracking features in export-controlled AI hardware — the very feature Beijing is now complaining about.
Nevertheless, Paul Triolo, a tech expert and partner at consultancy DGA-Albright Stonebridge Group, cast doubt on the CAC’s claims.
“I’m skeptical about the notion of a deliberate backdoor in Nvidia’s hardware,” Triolo said, noting that the CAC’s announcement lacked technical details or evidence.
Yet, Triolo acknowledged the broader tensions. “There are strong factions on both sides of the Pacific that don’t like the idea of renewing H20 sales,” he said. “In the U.S., the opposition is clear. But in China, there are also voices warning that relying on Nvidia again could delay the transition to an indigenous chip ecosystem.”
As the geopolitical battle over AI dominance intensifies, the CAC’s move could signal a shift from China, not just in terms of supply chain independence, but also as a bargaining chip in the ongoing tug-of-war with the U.S. over technology control. For Nvidia, that means the security accusations, however vague, may be less about cybersecurity and more about national interest.