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China is warning Nvidia about potential security risks related to possible tracking features in its H20 chips.

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China’s Cyberspace Administration summoned Nvidia for talks to clarify whether the H20 AI chip poses "backdoor security risks." The move follows U.S. plans to require exported chips to include tracking and positioning functions.

"Nvidia chips are now dispensable for China. They can be easily put on the negotiating table," said Tilly Zhang of Gavekal Dragonomics. "China obviously has more courage and domestic substitution capabilities compared to previous years to not rely on overseas technology."

Charlie Chai of 86Research added, "However, we do not believe Beijing will make excessively harsh demands or introduce regulatory hurdles that will effectively drive Nvidia out of China – for the lack of alternatives China still needs Nvidia chips for domestic research and applications." Beijing’s warning is "most likely a symbolic stance against similar objections made by U.S. authorities."

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The warning comes just weeks after Nvidia’s charm offensive in China, where CEO Jensen Huang praised the country's AI progress. Despite tensions, Nvidia last week ordered 300,000 H20 chipsets from TSMC due to strong Chinese demand.

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Max is the managing editor of THE DECODER, bringing his background in philosophy to explore questions of consciousness and whether machines truly think or just pretend to.
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