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Title: China Urges Firms To Avoid Nvidia H20 Chips After Trump Resumes Sales

Link: https://slashdot.org/story/25/08/12/2011252/c...

An anonymous reader quotes a report from Bloomberg: Beijing has urged local
companies to avoid using Nvidia's H20 processors, particularly for government-
related purposes, complicating the chipmaker's return to China after the
Trump administration reversed an effective US ban on such sales. Over the
past few weeks, Chinese authorities have sent notices to a range of firms
discouraging use of the less-advanced semiconductors, people familiar with
the matter said. The guidance was particularly strong against the use of H20s
for any government or national security-related work by state enterprises or
private companies, said the people, who asked not to be identified because
the information is sensitive. The letters didn't, however, constitute an
outright ban on H20 use, according to the people. Industry analysts broadly
agree that Chinese companies still covet those chips, which perform quite
well in certain crucial AI applications. President Donald Trump said Monday
that the processor "still has a market" in the Asian country despite also
calling it "obsolete." Beijing's stance could limit Trump's ability to turn
his export control about-face into a windfall for government coffers, a deal
that highlighted his administration's transactional approach to national
security policies long treated as nonnegotiable. Still, Chinese companies may
not be ready to jump ship to local semiconductors. "Chips from domestic
manufacturers are improving dramatically in quality, but they might not be as
versatile for specific workloads that China's domestic AI industry hopes to
focus on," said Homin Lee, a senior macro strategist at Lombard Odier in
Singapore. Lee added that he anticipates "strong" demand for the chips the
Trump administration is allowing Nvidia and AMD to sell. Rosenblatt
Securities analyst Kevin Cassidy said he doesn't anticipate that Nvidia's
processor sales to China will be affected because "Chinese companies are
going to want to use the best chips available." Nvidia and AMD's chips are
superior to local alternatives, he said. Beijing asked companies about that
issue in some of its letters, according to one of the people, posing
questions such as why they buy Nvidia H20 chips over local versions, whether
that's a necessary choice given domestic options, and whether they've found
any security concerns in the Nvidia hardware. The notices coincide with state
media reports that cast doubt on the security and reliability of H20
processors. Chinese regulators have raised those concerns directly with
Nvidia, which has repeatedly denied that its chips contain such
vulnerabilities. The Financial Times reported that some Chinese companies are
planning to decrease orders of Nvidia chips in response to the letters. Right
now, the people said, China's most stringent chip guidance is limited to
sensitive applications, a situation that bears similarities to the way
Beijing restricted Tesla vehicles and Apple iPhones in certain institutions
and locations over security concerns. China's government also at one point
barred the use of Micron Technology Inc. chips in critical infrastructure.
It's possible that Beijing may extend its heavier-handed Nvidia and AMD
guidance to a wider range of settings, according to one person with direct
knowledge of the deliberations, who said that those conversations are in
early stages.

Read more of this story at Slashdot.

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