- NVIDIAS H20 -CHIP became security in a heated geopolitical clash
- Nvidia’s income stream risks severe disturbance with the Chinese market tightening
- Chinese tech -giants hesitate to give up nvidia -hardware for weaker alternatives
China’s recent decision to tighten the restrictions on NVIDIA’s H20 -chip sales have drawn attention not only because of the technology involved, but also because of the circumstances that triggered it.
Reports show comments from U. Trade Secretary Howard Lutnick in mid -July 2025 was considered both “insulting” and Brash by China’s government.
In a television interview, Lutnick said Washington’s strategy was to ensure Chinese developers became “dependent” for the US technology rack.
“We don’t sell them our best things, not our second best thing, not even our third best,” Lutnick had told CNBC.
“You want to sell the Chinese enough for their developers to become dependent on the American technology card, that’s the thoughts,” he added.
The Chinese considered this remark unnecessarily arrogant, and it is now technically a step that presents sustained sales winds to Nvidia, a company that has long seen the country as a large market.
The H20 chip, specifically developed for China after export control, limited access to more advanced models, had become a key product for local AI companies.
NVIDIA Managing Director Jensen Huang recently visited Beijing and emphasized the company’s obligation to remain competitive in the region.
With China, which accounts for at least 15% of Nvidia’s total revenue, any disorder of H20 orders a serious challenge.
Washington and Beijing had previously entered into a framework agreement earlier in 2025, enabling the H20 to resume in China, while Beijing restored a rare ground export.
This agreement was interpreted as a step towards stabilizing conditions. At the end of July 2025, Chinese regulators as the Cyberspace Administration of China and the Ministry of Industry and Technology began to advise companies to stop new H20 orders.
This guide, framed as a response to Lutnick’s remarks, highlights the fragility of recent progress.
Alongside the limitations, Beijing has promoted the use of domestic chips, including those from Huawei.
However, there is still doubt about their efficiency, and Deepseek had to postpone the launch of its new R2 model after difficulty training with Huawei Ascend processors.
Chinese tech giants such as Alibaba, Baidu and Bytedance have also been reluctant to change fully, with reference to stronger service from Nvidia hardware compared to local alternatives.
The episode illustrates how political statements can quickly change the company’s fortunes, especially when national security and technology management are at stake.
While Nvidia has disputed claims of security risks tied to its products, Peking’s regulators seem to be determined to limit the dependence of US-made chips.
Whether Chinese companies can scale up to fill the gap remains uncertain, but what is clear is that Lutnick’s words have accelerated a process of decoupling that can unfold much faster than industrial analysts originally expected.
Via the Financial Times
