NVIDIA H20 production halt has escalated trade and technology tensions between the United States and China, placing the company’s supply chain and billions in annual revenue under pressure. The chipmaker has reportedly asked suppliers to suspend work on its China-focused AI chip following regulatory warnings in Beijing and ongoing export restrictions from Washington.
NVIDIA H20 production halt disrupts suppliers
NVIDIA instructed Arizona-based Amkor Technology, as well as Samsung Electronics in South Korea to halt activity associated with the H20 chip. Amkor is the advanced packager and Samsung supplies important memory components in the device. Foxconn known as Hon Hai Precision Industry was also told to freeze its backend processing of the chip.
NVIDIA confirmed it regularly adjusts supply arrangements in response to market conditions but declined to comment on specific supplier directives. Analysts noted that the pause highlights the fragile balance the company must maintain between U.S. export controls and China’s growing restrictions.
NVIDIA H20 production halt tied to security concerns
The Chinese regulators have encouraged technology giants such as the ByteDance, Alibaba, and Tencent to stop new orders of H20. The Cyberspace Administration of China had a fear that the chips would easily be curbed or monitored remotely. The question about the backdoor functions in the H20 design was asked to NVIDIA by officials, who wanted to be assured that there could be no chance for the backdoor functions in it.
Jensen Huang, the chief executive of the company, admits that such concerns were expressed by regulators in meetings. The company assured their Chinese officials there were no backdoors. Huang stated that NVIDIA is collaborating with Beijing in its step by step probe and is hopeful that the clarifications will quit the face off.
NVIDIA H20 production halt and diplomatic friction
In April, the U.S. government had halted NVIDIA shipments to H20 in China because of concerns it would be used in military purposes. By July the U.S. agreed to limited exports having agreed to take an estimated 15 percent of Chinese sales. But nerves were frayed following reports that the move to place limits on the chip was not exclusively security-related.
Chinese leaders are reported to have responded to the remarks by U.S. commerce secretary Howard Lutnick who argued that America knowingly markets lower grade technology to China. Lutnick said their aim was to keep Chinese developers locked to the American technology stack and these were viewed as very offensive remarks by the Chinese authorities, as reported by The New York Times.
NVIDIA H20 production halt hits revenue
NVIDIA indicated that the previous U.S. curtailments had already warranted it to clock in a $4.5 billion writedown on unsold H20 inventory. Executives report that sales were cut by about 2.5 billion dollars a quarter as a direct result of the export ban. An analyst at Bernstein, Qingyuan Lin, suggests that upwards of 20 billion a year in revenues regarding China are in danger, should Beijing set a total prohibition of the H20. Although NVIDIA would continue to sell lower-margin chips in the state, the analyst cautioned that demand would decline starting in 2026 when domestic alternatives are ramping up.
NVIDIA H20 production halt linked to new strategy
Reports also showed that NVIDIA has been working on an upgrade chip to the Blackwell architecture targeted at the Chinese market. The new model will provide approximately half the computing power of the company s flagship Blackwell Ultra GPUs but it is more than enough to supply the vast Chinese market, analysts point out and is the most powerful chip still allowed to be sold to China under the current U.S. export laws. But they noted that a long term threat to foreign suppliers is increasing pressure by Beijing to become self sufficient in semiconductors.
This clash is yet another reflection of the broader confrontation between Washington and Beijing over high-end semiconductor technology. The U.S. government believes that export controls are required to restrict China access to chips that can be used to improve its military capacity. Members of Congress in Washington have also presented the Chip Security Act, which would compel semiconductor companies to pre-install security elements and location verification into cutting-edge AI chips.On the Chinese side, officials have framed actions as national security and critical infrastructure safeguards. Beijing indicated to the domestic firms that it will stop using U.S-made chips in sensitive operations by ordering them to put their purchasing on hold.
NVIDIA CEO perspective
Speaking with reporters in Taiwan, Huang explained that NVIDIA had worked extensively to secure export licenses for the H20. He added that the company had also briefed U.S. President Donald Trump on the importance of sustaining America’s AI technology leadership globally. Huang argued that AI innovation would advance worldwide regardless of restrictions and stressed the need for U.S. firms to maximize their export opportunities during this industrial transformation
Huang reiterated that the H20 was designed for commercial use, not for military or government infrastructure. NVIDIA stated that allowing American chips for business applications benefits both economies, even if governments maintain restrictions on defense-related adoption.With suppliers paused, orders restricted, and diplomatic pressure rising, the future of the H20 remains uncertain. Market watchers said the pause could ripple across Samsung and Amkor’s supply chains, as both companies play critical roles in high-value chip production.