China Probes Nvidia (NVDA) Over AI Chip 'Backdoor' Concerns

China’s top cybersecurity authority has summoned Nvidia over concerns that its newly approved H20 artificial intelligence chips could pose national security risks, reigniting tensions in the global semiconductor race.

On July 31, 2025, China’s Cyberspace Administration (CAC) launched a formal inquiry into whether the U.S. chipmaker’s H20 processors, recently cleared for export by Washington, contain hidden “backdoor” capabilities. Officials fear these chips could allow remote tracking, data extraction, or even shutdown functionality—raising alarms about potential surveillance and sabotage.

“We’ve demanded documentation that ensures compliance with Chinese cybersecurity and data protection laws,” a CAC spokesperson stated, citing the country’s strict data governance framework.

The move comes just weeks after Nvidia resumed sales of its H20 chips to Chinese firms under revised U.S. export controls. Though limited in performance compared to Nvidia’s flagship AI GPUs, the H20 remains in high demand due to its compatibility with Chinese AI systems. Nvidia is reportedly moving forward with production, having ordered 300,000 units from TSMC to meet domestic demand.

Nvidia has strongly denied the allegations, saying:

“Cybersecurity is critically important to us. Nvidia does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them.”

At the heart of the dispute is growing concern over a proposed U.S. law—the Chip Security Act—which would allow the U.S. government to embed tracking or disabling functions into exported advanced chips. Though not yet enacted, the bill has triggered fears in China about potential foreign interference in critical AI infrastructure.

Chinese state media echoed the CAC’s concerns, calling for Nvidia to provide “convincing technical evidence” that its chips are secure. The commentary underscored that trust must be earned “not only by product performance, but by transparency and legal compliance.”

Despite the friction, the Chinese AI market remains one of Nvidia’s most lucrative overseas opportunities. Analysts say the outcome of this review could shape the future of cross-border chip commerce between the world’s two largest economies.

What’s Next?

• Nvidia must submit detailed documentation to Chinese regulators.
• Sales of H20 chips in China could face delays or restrictions pending CAC approval.
• This episode may embolden other countries to scrutinize chip imports more closely—potentially creating new trade hurdles for U.S. tech exports.

For Nvidia, the challenge now is to balance compliance, transparency, and geopolitical sensitivity—while holding onto its lead in the global AI chip race.