China Investigates Nvidia's H20 GPUs Over Spying Hardware Claims

Following months of uncertainty about whether Nvidia could sell its H20 GPUs to China, we have a new wrinkle in the story: Now, China doesn’t trust the hardware. China’s Cyberspace Administration (CAC) organization is reportedly investigating whether Nvidia’s GPUs include location tracking and other spying hardware.
Although other companies are rushing to compete, Nvidia’s graphics chips are currently the only real game in town for developers looking to train a new large language model. That’s mostly why Nvidia has been pushing so hard to develop new “AI factories” as the world rushes to adopt AI. After all, Nvidia could end up providing all the hardware.
But perhaps not in China. Despite a bustling smuggling market for Nvidia GPUs and their sale being used as a cudgel in ongoing trade negotiations, China may halt sales entirely if it isn’t satisfied with the way the cards might be able to spy on their users.
The CAC has summoned Nvidia executives to a meeting today to explain recent suggestions from the US administration that tracking hardware should be included with all AI hardware moving forward, per SCMP. This comes from a bill introduced by US Senator Tom Cotton in May, who wants to mandate additional security and tracking features in Nvidia chips that are sold to nations where there is potential for the GPUs to be sold on to individuals, companies, or countries that the US disapproves of.
China’s concern is that these backdoors and tracking systems are already in place in the Nvidia H20 GPU system. That seems unlikely if the US is only now looking to require it going forward; Nvidia also will have been working on the H200 GPUs that the H20 is based on for years.
Still, Nvidia will need to tread carefully. The CAC can prevent the sales of H20 GPUs in China, whether ongoing policy shifts from the US permit it or not. Nvidia is currently estimated to have close to a million H20 GPUs ready for sale, and any block from China would certainly slow sales dramatically.
Considering the global demand for GPUs—and the rapid pace of building new data centers with AI in mind—it seems likely Nvidia could find alternative buyers for its GPUs. Just this morning, a new Norwegian initiative was announced to purchase 100,000 of the cards to develop new AI infrastructure there.
That may give Nvidia further pause and suggest that its summoning of Nvidia executives could be more posturing than punitive.
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