China Tightens Grip on AI Chip Market, Restricts Nvidia Sales

In August 2025, China is taking a firm stance against Nvidia's efforts to regain a foothold in the country's AI chip market. Despite Nvidia securing a win last month to resume sales of its H20 chip, designed for the Chinese market, Beijing is now signaling increased distrust and scrutiny.

According to reports, Chinese regulators have urged companies to avoid using Nvidia's H20 chips, as well as those from Advanced Micro Devices, especially for government and national security use cases. Furthermore, regulators have gone so far as to order major tech firms, including ByteDance, Alibaba, and Tencent, to suspend Nvidia chip purchases altogether until a national security review is completed.

Nvidia has denied that its chips contain any "backdoors" or remote access capabilities, but the company's efforts to maintain market share in China are now facing significant headwinds. Beijing's actions highlight its steadfast commitment to achieving chip self-sufficiency and reducing reliance on American AI hardware.

While experts doubt that China will implement a complete ban on Nvidia's H20 chips, the ongoing investigation and delays in their return to the market could create more opportunities for domestic players as AI companies search for alternatives.