Beijing has launched a significant inquiry into Nvidia’s H20 AI chips, citing serious “backdoor” security concerns, escalating tensions in the global technology sector.

China’s Cyberspace Administration (CAC) recently summoned Nvidia executives, demanding detailed documentation to clarify potential vulnerabilities within the H20 computing chips sold within China, signaling a heightened focus on digital sovereignty.

This probe aligns with ongoing legislative efforts in the United States, particularly the U.S. Chip Security Act, which advocates for embedding security mechanisms like location tracking into advanced chips exported to foreign nations.

Nvidia CEO Jensen Huang has consistently refuted claims of security flaws in his company’s chips, navigating a complex geopolitical landscape that previously saw him successfully lobby for the resumption of AI chip sales to China.

The reauthorization of H20 chip sales was recently linked by Commerce Secretary Howard Lutnick to a rare earths agreement with Beijing, suggesting a strategic concession aimed at maintaining China’s reliance on American technological infrastructure.

Industry experts, such as Forrester’s Charlie Dai, caution that CAC’s rigorous examination of H20 chip security could significantly diminish Nvidia’s market presence in China, potentially delaying sales and intensifying competition from domestic manufacturers.

This strategic move by China further underscores its broader ambition to cultivate indigenous semiconductor capabilities, striving for technological autonomy amidst persistent US export restrictions and leveraging such investigations to enhance its position in trade negotiations.

The unfolding situation highlights the intricate interplay between national security, economic policy, and technological innovation, setting a precedent for how global powers scrutinize and regulate the rapidly evolving artificial intelligence hardware landscape.