China's Tech Titans Cut Orders for NVIDIA H20 AI Chips
China's tech titans are reportedly slashing orders for NVIDIA's H20 AI chips. The decision is said to stem from concerns in Beijing about the reliance of the domestic industry on U.S. AI technology and a strategic push toward local alternatives.
The Push to Break U.S. Tech Dependency
The move goes beyond mere ideologies and official policies. While heavy speculation is in the air, there have been reports that China's Cyberspace Administration launched an investigation into the H20 AI accelerators, checking for potential backdoors, with some lawmakers even asking for a complete ban on the chips.
These remarks, especially those of Howard Lutnick, U.S. Commerce Secretary, that "the U.S. should make Chinese developers 'addicted' to American technology," further prompted this crackdown. Senior officials in China were reportedly offended by these remarks and have begun courting the local tech giants to slow down their purchase of NVIDIA's H20 chips.
Huawei and Domestic Alternatives Emerge
As a result, many Chinese firms are claiming to have either downsized their orders or abandoned them altogether. Growing support is being given for domestic platforms from vendors like Huawei and Cambricon. Solutions from these Chinese companies are said to be good enough for some inferencing workloads.
The Reality of High-End AI Chip Dependency
Yet a clean break from U.S. technology seems rather immeasurable at this point. China aims to meet its AI computing needs with domestic chips by next year when production is expected to ramp up, but at the moment, it has no credible competition to NVIDIA in moving the needle for its most demanding high-end workloads.
The dependency suddenly became clearer due to the developments around the delay that the AI company DeepSeek had with its R2 model. The company tried to utilize domestic AI chips for the task but ended up reverting to NVIDIA's technology stack to complete the project. This goes on to show China's immediate demand for high-performance U.S. AI hardware for its leading projects.
Source: Based on a report by the Financial Times.
