China Pushes Back on Nvidia After Lutnick’s Remarks

China is scaling back support for Nvidia’s H20 artificial intelligence chip after comments from U.S. Commerce Secretary Howard Lutnick were viewed in Beijing as dismissive. Lutnick said Washington would ensure China does not receive “the best” U.S. chips, a remark Chinese regulators interpreted as an insult. The reaction has triggered quiet pressure on domestic tech giants, including Alibaba and ByteDance, to reduce their reliance on Nvidia’s H20 chips.

Security Concerns Come Into Focus

Beyond political sensitivities, regulators have flagged cybersecurity risks. Agencies such as the Cyberspace Administration of China have raised concerns over possible “backdoor” vulnerabilities in Nvidia hardware, despite the company’s assurances. The scrutiny reflects a broader trend of tighter oversight of foreign technology as U.S.–China tensions deepen.

Beijing’s Push Toward Self-Reliance

While China has not banned Nvidia outright, authorities are nudging firms toward local alternatives. Domestic chipmakers such as Huawei and Cambricon are being positioned as strategic substitutes, aligning with Beijing’s broader goal of technological self-sufficiency. Nvidia CEO Jensen Huang has sought to maintain relations with Chinese partners, but the official tone is shifting toward reduced dependence on U.S. suppliers.

Implications for Nvidia and the Market

China accounts for roughly 13% of Nvidia’s revenue, making the region a key market. Analysts had expected the H20 chip to generate billions in sales in the second half of the year, but rising skepticism now clouds that outlook. Some reports suggest Nvidia is already preparing a new “B30A” chip tailored for China in an effort to preserve market share under tightening restrictions.

Tips for Traders

• Monitor Nvidia’s sales guidance for signs of weaker Chinese demand.

• Watch rival U.S. chipmakers like AMD, which could face similar pressures.

• Track policy updates from Beijing that signal greater support for domestic chip firms.

• Follow supply chain data for early indications of reduced H20 shipments.

• Look for developments around Nvidia’s next-generation chips designed for the Chinese market.