China escalated pressure on Nvidia Friday, with the state-controlled People’s Daily publishing a pointed opinion piece titled “Nvidia, how can I trust you?” — one day after regulators summoned company officials over alleged security vulnerabilities in H20 artificial intelligence chips.
The commentary, published on WeChat and Sina Weibo, represents Beijing’s most direct public challenge to the chipmaker since the Trump administration reversed an export ban on H20 chips weeks ago. Despite Nvidia’s denials of backdoors, the state media outlet emphasized that “the company can only alleviate the concerns of Chinese users and restore market trust by providing convincing security evidence as required by the summons.”
The escalation began Thursday when China’s Cyberspace Administration (CAC) summoned Nvidia representatives to address “serious security issues” related to potential tracking and remote shutdown capabilities embedded in the H20 chips, demanding explanations and supporting documentation regarding alleged backdoor security risks.
China paints dystopian chip failure scenarios
The People’s Daily commentary painted scenarios of potential chip vulnerability exploitation: “a new-energy vehicle on the highway suddenly loses power; a patient undergoing remote surgery experiences a black screen; a mobile phone payment function suddenly fails at a supermarket checkout.” The piece warned that “once the security risk of vulnerabilities and backdoors in computing chips is triggered, we could face a ‘nightmare’ at any time.”
Beijing’s security probe connects directly to recent US legislative proposals requiring advanced AI chips to include mandatory location tracking systems. Senator Tom Cotton introduced the Chip Security Act on May 8, 2025, designed to “prevent advanced American chips from falling into the hands of adversaries like Communist China.”
The proposed legislation would require export-controlled advanced chips to be equipped with location verification mechanisms within six months of enactment, and mandate exporters to report to the Bureau of Industry and Security if products are diverted or tampered with.
The CAC statement cited “demands from US lawmakers to add tracking features to advanced chips” and noted that “US artificial intelligence experts have indicated that remote control technologies related to Nvidia’s chips have matured.”
Nvidia denials fall short, China says
The People’s Daily referenced Nvidia’s previous statement that “Cybersecurity is critically important to us. Nvidia does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them.” However, the state media outlet dismissed this response as insufficient, emphasizing that only “convincing security evidence” would restore trust.
The chipmaker faces pressure balancing US security requirements with Chinese market demands. US Commerce Secretary Howard Lutnick described the H20 as Nvidia’s “fourth best” processor when announcing export resumption: “We don’t sell them our best stuff, not our second best stuff, not even our third best.”
The H20 chip is part of Nvidia’s China-specific product line, engineered to meet US trade restrictions by reducing performance while maintaining sufficient processing power for Chinese customers. It’s based on Nvidia’s Hopper architecture but with trimmed specifications.
Enterprise IT faces chip procurement challenges
The confrontation highlights tensions over semiconductor supply chains critical to enterprise AI deployments. The People’s Daily noted that “cybersecurity not only impacts our daily lives but also acts as the lifeblood of businesses, and is directly linked to national security.”
For enterprise technology leaders, the dispute underscores complexity in global AI chip procurement amid heightened geopolitical tensions. Organizations with operations in multiple regions may need to reassess semiconductor sourcing strategies as both US tracking requirements and Chinese security concerns reshape market dynamics.
The semiconductor industry faces the challenge of developing products satisfying both American export control requirements and Chinese security standards—a balancing act that could define the future of global AI hardware markets.
Trade war hits $130B in semiconductor losses
The dispute unfolds against the intensifying US-China technology competition, reshaping global semiconductor supply chains. The Biden administration implemented sweeping export controls in October 2022 targeting China’s access to advanced semiconductors, with restrictions tightened in October 2023 and December 2024.
According to the Center for Strategic and International Studies, the October 2022 export controls announcement resulted in $130 billion market cap loss for affected US semiconductor firms. China responded with a $47.5 billion semiconductor investment fund in May 2024, its third such fund in the past decade.
Under the second Trump administration, average US tariffs on Chinese exports reached 54.9% as of August 2025, covering all goods. China retaliated with 32.6% average tariffs on US exports.
Chinese AI startup DeepSeek’s January 2025 launch of advanced AI models rivaling US companies like OpenAI demonstrates continued innovation despite restrictions. Nvidia did not immediately respond to a request for comment.
Source:: Network World