Chinese state media warns about Nvidia chips as US tariff truce deadline looms

CNN

2 days ago

Tech firm Nvidia's H20 chips pose security concerns for China, a social media account linked to Chinese state media said Sunday, as Washington and Beijing near a deadline to strike a deal in trade negotiations in which technology has also emerged as a key issue.
China could choose not to buy US tech firm Nvidia's H20 chips, said the account, Yuyuan Tantian, which is affiliated with state broadcaster CCTV, as it claimed that the artificial intelligence (AI) chips could have 'backdoors' that impact their function and security.
'When a type of chip is neither environmentally friendly, nor advanced, nor safe, as consumers, we certainly have the option not to buy it,' said the commentary, which came after China's cybersecurity administration also raised concerns over backdoor access in those chips.
Nvidia has repeatedly denied that its products have backdoors.
China's access to American technology, especially high-end chips that can be used in the development of artificial intelligence, has become a key issue in trade and tech frictions between the rival economies – as both vie for tech dominance.
A trade truce between the two countries that reduced triple-digit tariffs is set to expire on August 12, though officials have signaled an extension could come into effect following talks in Sweden last month.
Nvidia last month said it would resume sales of the H20 chip to China after the White House changed course on export controls it imposed in April as its trade frictions with China deepened. US Treasury Secretary Scott Bessent told Bloomberg in an interview at the time that the Nvidia export controls have been a 'negotiating chip' in the larger US-China trade talks.
Nvidia and another tech firm Advanced Micro Devices (AMD) have agreed to pay the US government 15% of their revenues from semiconductor sales to China in exchange for export licenses, the Financial Times reported Sunday.
The unprecedented quid pro quo arrangement is part of a deal with the Trump administration to obtain export licenses to sell Nvidia's H20 chips and AMD's MI308 chips in China, the FT reported, citing people familiar with the situation, including a US official. The New York Times and Reuters also later reported the 15% commission deal, citing sources.
Nvidia released the H20 chip last year to maintain access to the Chinese market following strict export controls put in place under the Biden administration that stopped the export of chips with greater processing power.
Nvidia's announcement last month that it would be able to export the H20 chip to China raised concerns among some US lawmakers, who support tight controls to prevent China from using American technology to advance its military and AI systems.
China's mounting concern about the security of the chips comes after the White House last month recommended implementing export controls that would verify the location of advanced artificial intelligence chips. China's cyberspace regulator late last month summoned Nvidia over security concerns about 'tracking and positioning' and 'remote shutdown' capabilities.
In a blog post published last week, Nvidia reiterated that its chips did not have back doors, spyware or kill switches and said that 'embedding backdoors and kill switches into chips would be a gift to hackers and hostile actors.'
China's security concerns appear to mirror those that the US has in the past expressed about Chinese technology, most prominently the first Trump administration's campaign against the growing foothold of Chinese tech giant Huawei in global communications infrastructure.
Chinese leaders have also pushed for the country's tech firms to become self-sufficient and reduce reliance on American-made chips to achieve Beijing's AI and tech ambitions, and experts have said that controls on chips like the H20 could push China to speed up its own innovation.
But the H20 is not the only technology that reports suggest is entangled with negotiations between the two sides.
According to another report from the FT also published Sunday, China wants the US to ease export controls on a critical component for artificial intelligence chips as part of a trade deal ahead of a possible summit between President Donald Trump and Chinese leader Xi Jinping.
Chinese officials have told experts in Washington that Beijing wants the Trump administration to relax export restrictions on high-bandwidth memory (HBM) chips, the FT reported, citing several people familiar with the matter.
The US government imposed export controls on the sale of such memory chips to China last year.
CNN's Nectar Gan contributed to this report.