China has advised domestic companies to avoid using Nvidia’s H20 chips, particularly in government and security-critical projects, dealing a blow to the U.S. tech giant’s efforts to circumvent export restrictions. The H20, designed specifically for the Chinese market, now faces scrutiny as regulators question reliance on foreign semiconductors. Major firms, including Alibaba and ByteDance, have been asked to justify planned orders, with some considering reductions. The move undermines Nvidia’s recovery in China after recent U.S. sanction relaxations, jeopardizing a market accounting for 13% of its revenue.
Geopolitical Tensions Escalate
The Chinese government is pushing local alternatives like Huawei’s chips, boosting shares of domestic manufacturers. Meanwhile, the U.S. administration has mandated Nvidia to divert 15% of its China revenue to Washington—a policy Beijing cites to justify its boycott. Investors initially shrugged off the news, but weakening demand and shifting market preferences toward value stocks add pressure. The dual challenges of political headwinds and fading investor enthusiasm threaten Nvidia’s growth trajectory in a critical market.
