China urges firms not to use Nvidia H20 chips in new guidance
Over the past few weeks, Chinese authorities have sent notices to a range of firms discouraging use of the less-advanced semiconductors, sources familiar with the matter said, asking not to be named discussing sensitive information. The guidance was particularly strong against the use of H20s for any government or national security-related work by state enterprises or private companies, the sources said.
In addition to Nvidia, Beijing's overall push affects artificial intelligence (AI) accelerators from Advanced Micro Devices (AMD), one of the sources said, though it's unclear whether any letters specifically mentioned AMD's MI308 chip. Both companies recently secured Washington's approval to resume lower-end AI chip sales to China, on the controversial and legally questionable condition that they give the US government a 15 per cent cut of the related revenue.
Now, Nvidia and AMD face the challenge that their Chinese customers are under Beijing's pressure not to make those purchases.
Some of Beijing's letters to companies included a series of questions, according to one of the sources, such as why they buy Nvidia H20 chips over local alternatives, whether that's a necessary choice given domestic options, and whether they have found any security issues 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.
Right now, 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 chips in critical infrastructure.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Still, it's possible that Beijing may extend its heavier-handed Nvidia and AMD guidance to a wider range of settings, according to one source with direct knowledge of the deliberations, who said that those conversations are in early stages.
AMD declined to comment, while Nvidia said that 'the H20 is not a military product or for government infrastructure'. China has ample supplies of domestic chips, Nvidia said, and 'will not and never has relied on American chips for government operations'.
China's Ministry of Industry and Information Technology and the Cyberspace Administration of China did not respond to faxed requests for comment on this story, which is based on interviews with more than a half-dozen sources familiar with Beijing's policy discussions. The White House did not respond to a request for comment outside normal business hours.
The Chinese government's posture could make it more difficult for Nvidia and AMD to sell their hardware into the world's largest market for semiconductors. It also raises questions about the Trump administration's explanation for why the US is allowing those exports mere months after effectively banning such sales.
Multiple senior US officials have said that their policy reversal was part of a trade accord with China, but Beijing has publicly indicated that the resumed H20 shipments were not part of any bilateral deal. China's recent notices to companies suggest that the Asian country may not have desired such a concession from Washington in the first place.
Beijing's concerns are twofold. For starters, Chinese officials are worried that Nvidia chips could have location-tracking and remote shutdown capabilities, a suggestion that Nvidia has vehemently denied.
Still, Trump officials are actively exploring whether location-tracking could be used to help curtail suspected smuggling of restricted components into China, and lawmakers have introduced a bill that would require location verification for advanced AI chips.
Second, Beijing is intensely focused on developing its domestic chip capabilities, and wants Chinese companies to shift away from Western chips in favour of local offerings. Officials have previously urged Chinese firms to choose domestic semiconductors over Nvidia H20 processors, Bloomberg reported last September, and have introduced energy efficiency standards that the H20 chip does not meet. But Beijing has stopped short of outright banning the hardware, which Nvidia designed specifically for Chinese customers to abide by years of US curbs on sales of advanced chips to the Asian country.
The H20 chip has less computational power than Nvidia's top offerings, but its strong memory bandwidth is quite well suited to the inference stage of AI development, when models recognise patterns and draw conclusions. That's made it a desirable product to companies such as Alibaba Group Holding and Tencent Holdings in China, where domestic chip champion Huawei Technologies is struggling to produce enough advanced components to meet market demand.
By one estimate from Biden officials, who considered but did not implement controls on H20 sales, losing access to that Nvidia chip would make it three to six times more expensive for Chinese companies to run inference on advanced AI models.
'Beijing appears to be using regulatory uncertainty to create a captive market sufficiently sized to absorb Huawei's supply, while still allowing purchases of H20s to meet actual demands,' said Lennart Heim, an AI-focused researcher at Rand, of China's push for companies to avoid American AI chips. 'This signals that domestic alternatives remain inadequate even as China pressures foreign suppliers.'
US President Donald Trump on Monday called the H20 chip 'obsolete', saying that China 'already has it in a different form'. That echoed previous statements by officials in his administration, who defended the decision to resume H20 exports on the grounds that Huawei already offers comparable chips to the H20.
The US should keep the Chinese AI ecosystem reliant on less-advanced American technology for as long as possible, these officials argue, in order to deprive Huawei of the revenue and know-how that would come from a broader customer base.
Commerce Secretary Howard Lutnick and other Trump officials have also claimed that the H20 move was part of a deal to improve American access to Chinese rare-earth minerals, despite the Trump team's previous assertions that such an arrangement was not on the table.
'As the Chinese deliver their magnets, then the H20s will come off,' Lutnick said last month. Treasury Secretary Scott Bessent said in late July that the magnet issue had been 'solved'.
The first Nvidia H20 and AMD MI308 licenses arrived a bit over a week after Bessent's declaration, after Nvidia chief executive officer Jensen Huang met with the president and both companies agreed to share their China revenue with the US government. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
35 minutes ago
- Straits Times
Democrats fret about which city may be next as National Guard gathers in US capital
Sign up now: Get ST's newsletters delivered to your inbox U.S. military personnel walk with boxes of Meals Ready-to-Eat, MREs, outside the D.C. Armory after U.S. President Donald Trump's announcement to deploy the National Guard and federalize the Metropolitan Police Department in Washington, D.C., U.S., August 12, 2025. REUTERS/Elizabeth Frantz WASHINGTON -A steady stream of uniformed soldiers arrived at the National Guard headquarters in Washington on Tuesday morning, a day after President Donald Trump took the extraordinary step of deploying a force of 800 troops to fight crime in the nation's capital. The deployment has drawn the scorn of Democrats who describe the move as political theater and raised questions about where National Guard troops might be sent next. With Trump threatening to replicate the deployment in other big cities, Democrats pointed out that violent crime in Washington has dropped to historic lows in the past two years. Washington Mayor Muriel Bowser sought to put positive spin on the deployment on Tuesday, saying she wanted to use it to drive down crime, despite earlier calling the move "unsettling and unprecedented." She said the National Guard would not have the power to make arrests. Troops will carry no weapons but will have their standard issue firearms, usually rifles, close at hand, an official said. In addition to the National Guard, Trump will send about 500 federal law enforcement agents to supplement the city's police force during the 30-day emergency deployment. 'We have more police and we want to make sure we use them,' Bowser told reporters on Tuesday. Earlier Bowser met with U.S. Attorney General Pam Bondi, who said on X that the exchange was productive. Top stories Swipe. Select. Stay informed. Singapore Luxury items seized in $3b money laundering case handed over to Deloitte for liquidation Singapore MyRepublic customers air concerns over broadband speed after sale to StarHub Singapore Power switchboard failure led to disruption in NEL, Sengkang-Punggol LRT services: SBS Transit Singapore NEL and Sengkang-Punggol LRT resume service after hours-long power fault Business Ninja Van cuts 12% of Singapore workforce after 2 rounds of layoffs in 2024 Singapore Hyflux investigator 'took advantage' of Olivia Lum's inability to recall events: Davinder Singh Singapore Man who stabbed son-in-law to death in Boon Tat Street in 2017 dies of heart attack, says daughter Singapore Man who stalked woman blasted by judge on appeal for asking scandalous questions in court Invoking emergency powers, Trump has also given Bondi control of the D.C. Metropolitan Police as part of his campaign to rid the city of "violent criminals, roving mobs of wild youth, drugged-out maniacs and homeless people" - a portrayal mocked by Democrats as distorted and exaggerated. "We agreed that there is nothing more important than keeping residents and tourists in Washington, D.C., safe from deadly crime," Bondi said. In the District of Columbia, violent crime has rapidly declined since a spike in 2023 and is now at historically low levels, data shows. 'Making D.C. the test case for federalizing local policing —by deploying the National Guard and seizing control of our police force — is political theater and a blatantly phony justification for abuse of emergency powers," said Monica Hopkins, executive director of the ACLU's D.C. office. But Stephen Miller, a top adviser to Trump, said crime statistics in Democratic-led cities were fabricated, without providing evidence. "The real rates of crime, chaos & dysfunction are orders of magnitude higher," he wrote on X on Tuesday. "Everyone who lives in these areas knows this." BREAK WITH NORMS Deploying the National Guard to other cities would mark a further break with political norms from an administration that has been assertive about deploying presidential power, and critics say the move may not be legal. In Washington, the D.C. National Guard reports directly to the president, enabling Trump to bypass the city's elected leaders. In the states, by contrast, the National Guard serves as a militia that answers to the governor, except when called into federal service. Troops are rarely deployed to police U.S. civilians. Trump's decision to take control of California's National Guard in June in response to immigration protests was the first time since the 1992 Rodney King riots that National Guard members were deployed in response to unrest on U.S. soil. Other deployments came in response to disasters or to bolster border security. The California deployment was also the first time since the Civil Rights era that a state's National Guard was federalized without the consent of a state's governor. After California sued, a trial is underway to determine whether Trump's use of the troops to bolster immigration raids and other police operations is lawful. A ruling against Trump by the federal judge in California would set a strong legal precedent, but may not bind the president, who said on Monday he might take similar action in other major U.S. cities with Democratic leadership. During Trump's election campaign he singled out majority Democratic cities such as Baltimore, Chicago and Washington - all cities with large Black populations - when he spoke about rampant crime in urban areas. Chicago, which Trump mentioned on Monday, has long been beset by violent crime, but it was down significantly in the first half of the year. Chicago Mayor Brandon Johnson said in a statement on Monday that Trump was spreading misinformation about crime, saying homicides dropped 30% in the past two years and shootings were down 40% in the past year alone. "If President Trump wants to help make Chicago safer, he can start by releasing the funds for anti-violence programs that have been critical to our work to drive down crime and violence," Johnson said." REUTERS
International Business Times
an hour ago
- International Business Times
Trump Makes Surprise U-Turn, Praises Intel CEO After Calling for His Resignation
President Donald Trump is doing an about-face on Intel's chief executive, Lip-Bu Tan. Trump had just a week ago publicly urged Tan to step down. He said Monday he met with Tan and called him a "winner." X Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent also attended the meeting. Tan and his cabinet members will now assemble technology and manufacturing proposals that they intend to present to Trump next week, the president said. Trump posted about the meeting on Truth Social, saying Tan's rise in the tech industry was an "amazing story." The comments stood in stark contrast to the week before, when he had blasted Tan as "very conflicted" partly over historical business ties to China. Intel confirmed the meeting but called it "candid and constructive." The company included US tech and chip capabilities in the discussion. Tan, who became CEO of Intel in March, had been on the board since 2022. He has faced political scrutiny from Senator Tom Cotton for his past leadership of Cadence Design Systems, a company that is closely connected to China. Trump's change of tune comes as his administration champions an even more muscular industrial policy for the semiconductor sector. U.S. officials have described a global competition with China for supremacy in chip production and artificial intelligence technology. The same weekend, Nvidia said it would reserve 15% of certain sales to China in exchange for export control licenses granted by US regulators. Initially, Trump said, he would have made it 20%, OK, but Nvidia CEO Jensen Huang negotiated a lower figure. Intel is currently facing major challenges. It is struggling to catch up with Nvidia in AI development. The global tech giant has spent billions of dollars on ramping up its chip foundry business, but scaled back some expansion plans in Europe and Ohio. Tan has also announced job cuts to manage costs. Tan, 65, was born in Malaysia but is a Singaporean who immigrated to the U.S. He received his master's in engineering from MIT. Despite calling his first few months as CEO very difficult, he's sticking to Intel's restructuring. Shares of Intel rose 2 per cent in after-hours trading related to news of the meeting, indicating investor optimism over a possible renewed partnership between the company and the US government.
Straits Times
an hour ago
- Straits Times
Half a century of building financial ecosystems and trust
Sign up now: Get ST's newsletters delivered to your inbox PhillipCapital looks to its next 50 years with clients, digital innovation and global connectivity at the heart of its strategy The key management team of PhillipCapital Group including Phillip Securities Managing Director Luke Lim (4th from right), posing for a photo with Lim Hua Min (4th from left) and Gillian Tan (centre), Assistant Managing Director (Development and International) & Chief Sustainability Officer of Monetary Authority of Singapore, during PhillipCapital's 50th Anniversary Appreciation Gala at the Fullerton Hotel on April 23, 2025. WHEN Lim Hua Min executed his first trade in 1975, Singapore's fledgling stock market still operated with paper tickets amid the trading floor's cacophony of shouts and gestures. Lim Hua Min, executive chairman of PhillipCapital, on the trading floor in 1975 – the year he founded Phillip Securities. Fast forward five decades, and his modest brokerage has transformed into PhillipCapital Group – a diversified financial services group managing over US$65 billion in assets for over 1.5 million clients across 15 markets – a journey that mirrors Singapore's own transformation into a global financial hub. That unassuming team of 20, once housed at Phillip Street's Grand Building, is today a financial house with more than 5,000 employees worldwide. Group shareholders' equity now exceeds US$2.5 billion. An unblemished record of profitability over its 50-year history – not a single year of losses – testifies that PhillipCapital has not merely weathered multiple economic storms, it has thrived through them. When the Pan-Electric crisis of 1985 decimated the stockbroking industry – it was one of just three local brokerages left standing. The Asian financial crisis of 1997 and the 2008 global financial meltdown similarly did not break its growth trajectory. Now, at 79, Lim is unfazed by the heightened geopolitical uncertainty of today. 'The Chinese phrase for crisis is accurate. Where there's a crisis, there's also opportunity,' the executive chairman of PhillipCapital Group says. His is a confidence undergirded by hard-won experience. After all, each market crisis has kindled fresh growth for his business. In the wake of the Pan-Electric collapse, the firm captured 20 per cent market share and attracted good remisiers whose firms had failed. When the Asian financial crisis hit, strategic acquisitions granted the firm critical inroads into Thailand's market, previously impenetrable due to strict foreign ownership conditions. 'There's tremendous opportunity in crisis, not that you wish for it,' Lim says. 'But you know that when it comes to economic cycles, it's better to expand in the worst of times rather than the best of times.' 'There's tremendous opportunity in crisis, not that you wish for it. But you know that when it comes to economic cycles, it's better to expand in the worst of times rather than the best of times,' says Lim Hua Min, PhillipCapital founder and executive chairman. In the past year, the group has closed several deals overseas including in Thailand and Australia. It continues to cast its nets wide. 'I've told my people; we are on the lookout. There are many firms that are not able to adjust to the zero-commission environment. This will create a shakeout in this industry, and this shakeout becomes an opportunity,' says Lim. The numbers speak for themselves – client assets under management have swelled from over US$35 billion in 2020 to more than US$65 billion today. Beyond broking, democratising access to capital Strategic diversification has transformed PhillipCapital's revenue streams over the decades. While stockbroking once generated 90 per cent of group revenue, it now accounts for just 30 per cent, with the growth of newer segments such as fund management, wealth advisory, and real estate consultancy. Regional expansion led it to lay roots down across the South-east Asian markets of Malaysia, Indonesia, Cambodia and Vietnam, as well as China, India and Japan. But it has moved beyond Asia too, with offices in Australia, UK, US, UAE and Turkey. 'We started as a broking firm, so we entered many countries using that as an initial thrust,' says Lim. 'But from there, we tend to build ecosystems, rather than just stockbroking. We believe in the integration of the industry.' He sees PhillipCapital's evolution through dual lenses: horizontal growth – geographic expansion, and vertical development – the broadening of products, services, and business lines. 'Our role is to participate in the growth and creation of capital,' Lim states – the reason the privately held group rebranded as PhillipCapital, while retaining the Phillip Securities name for its brokerage and wealth advisory arm. The nature of capital itself is something that 'keeps him awake at night', Lim told guests at the group's 50th anniversary celebration in April. Specifically, whether his business promotes access to capital and its potential to improve lives. This philosophy also explains the company's venture into the asset class of real estate through its Agility Group of companies, which offers everything from Reit management to property management, valuation to consultancy. 'If it's just a building, only a few tycoons can buy it,' Lim explains. 'But divide it into smaller shares, millions can buy a part of it. So, it's all back to the attributes of capital, isn't it? Making assets definitive, measurable, divisible, transferable, registrable, and fungible.' Constant innovation It's hard to imagine a time without mobile trading platforms, but back in 1996, Phillip Securities was ahead of the game with its launch of POEMS (Phillip's Online Electronic Mart system). It was the first online trading platform for retail investors in Singapore. 'This spirit of innovation has carried through to our present-day initiatives,' says Luke Lim, the founder's son and managing director of Phillip Securities. 'We now embrace innovative technologies like artificial intelligence, machine learning, and blockchain to enhance customer experience and optimise operational efficiencies.' A recent result of this is the launch in April of POEMS GPT, an AI chat companion that swiftly mines vast financial datasets for relevant insights that might aid clients in investment decisions. The group's innovative bent has also produced novel offerings such as its launch of digital wine tokens in 2022, which enables accredited investors to invest in rare wines without fussing over negotiations, storage, and documentation. The asset-backed securities trade on Alta, a private blockchain-powered securities exchange licensed by the Monetary Authority of Singapore (MAS). It is now also working to tokenise and commercialise money market funds, as part of the MAS' Project Guardian initiative. 'This would open up new use cases for this asset class,' says the younger Lim. 'As digital banking continues to evolve, staying relevant is not just adopting technology, but integrating it into every facet of our business to deliver value,' says Luke. 'We focus on enhancing accessibility, improving client outcomes, and ensuring robust security in an increasingly connected but fragmented world,' he adds. While the group now serves high net worth individuals, family offices, corporates, and institutions, it has not departed from its original mission of providing the average 'man on the street' with access to capital. It is why financial literacy and investor education has been, and continues to be, a pillar of the group's offerings. In an age of robo-advisers, it holds to its 'high touch, high tech' approach with 14 investor centres intentionally located for convenience and in neighbourhoods across Singapore. These offer regular investment and other seminars and face-to-face consultations. 'Our strongest competition today arises from both traditional financial institutions and disruptive fintech startups,' acknowledges Luke. Large players have the advantage of scale, while fintech firms excel in user experience and agility. This underlines the need for constant reinvention. 'Investing will always be there, but stockbrokers may not. Insurance will always be there, but insurance companies may not. Banking will always be there, but banks may not,' the elder Lim quips. For now, Luke believes PhillipCapital has found a 'sweet spot of creating our own flywheel with the customer at the centre'. Having POEMS as its own fintech arm provides digital scale and affordability. Its comprehensive range of financial services makes it a one-stop shop for the retail investor's needs, from protection to trading to wealth management. And the personal touch of dedicated financial advisers and remisiers builds relationships, he says. Globally, the group sees much potential in embedding itself deeply in emerging markets, particularly in India and across South-east Asia, where financial literacy and technology adoption are surging. 'We see great opportunity in advancing our digital products and expanding into underserved markets,' Luke says. Growing timber, building pillars A key plank of its long-term strategy has been thoughtful succession planning. 'We grow our own timber. We don't take from outside,' states the elder Lim. 'Succession should be from within. It's only a failure of top management to plan for the future, to always have to get somebody new from outside.' He sees this as an outworking of core values. 'A core value for us is that we see that every man, created in God's image, has tremendous potential,' Lim says. 'It behoves our company to avail opportunities in training, service, and responsibilities. We view retrenchment as management failure rather than cost-cutting to serve shareholders' interests,' he says. And he has confidence in his core management team – each of the five having worked alongside him for more than a decade. Indeed, Luke sees the group's next 50 years being built on three pillars that have supported its journey so far – customer-centricity, innovation, and global connectivity. 'Putting our clients first is the foundation of the future we're building,' he says. 'It compels us to use advanced analytics to anticipate needs and foster a culture of client focus at every level of our organisation.' The innovation pillar, meanwhile, will expand PhillipCapital's digital ecosystem, with AI-driven advisory platforms and data-driven decision-making tools. 'We aim to remain a forerunner in financial services by continually investing in technology and fintech partnerships,' says Luke. The final pillar extends the group's diversification strategy, with plans to expand its presence beyond the current 15 global locations to serve new markets and a more diverse client base. Singapore and the world's financial landscape may have changed dramatically since 1975, but PhillipCapital's fundamental mission has not. Luke says, 'It is to stay true to our roots as a trusted financial partner, while embracing the opportunities of a rapidly changing world.'
