China Probes Nvidia's H20 AI Chips Over Security Risks

* Chinese regulators summon Nvidia over H20 chip security risks. * U.S. decision to lift chip export ban on China sparks security debate. On July 31, 2025, the South China Morning Post reported that Chinese authorities summoned Nvidia officials to address alleged security vulnerabilities in the company's H20 AI chips. The Cyberspace Administration of China (CAC), which oversees the country's internet security, raised concerns about "backdoor security risks," claiming the chips enable location tracking and remote shutdown capabilities that external parties can activate. The CAC stated that these measures help ensure network and data security for Chinese users under national cybersecurity laws. The agency also noted that U.S. artificial intelligence experts have highlighted the mature technology for tracking and remote operations embedded in Nvidia’s chips. As part of its investigation, the CAC has requested documents and explanations from Nvidia to clarify the allegations. These security concerns arose shortly after the U.S. government’s April decision to lift its ban on Nvidia and AMD chip sales to China, a reversal that allowed Nvidia to resume exporting H20 chips to Chinese companies. The Biden administration framed the decision as part of broader trade negotiations to resolve disputes over rare earth mineral access. However, the move sparked backlash from U.S. lawmakers who fear that giving China access to America’s advanced semiconductor technology could enhance Beijing’s AI capabilities and strengthen its military. In a letter to the Commerce Secretary, Representative John Moolenaar of Michigan described the policy reversal as a national security risk and urged for more transparent export licensing procedures and greater accountability for H20 chip shipments to China. In addition, U.S. lawmakers have introduced a proposal to mandate location-tracking technology in AI chips exported to China to prevent their unauthorized use. Nvidia has not publicly confirmed if the H20 chips contain any tracking or remote shutdown functions and did not respond to immediate requests for comment on the CAC's investigation. The company previously stated that it designed the H20 chip with reduced computing power to comply with U.S. export regulations and prevent misuse. After the ban was lifted, Nvidia ordered 300,000 units of the chip from Taiwan Semiconductor Manufacturing Company (TSMC), citing strong demand from Chinese firms. According to CoinMarketCap data on July 31, Nvidia (NVDA) was trading at $471.24 as of 12:30 UTC, with its 24-hour trading volume down 1.2%.