Beijing, China (Enmaeya News) — Beijing has reportedly urged Chinese companies to stop purchasing Nvidia Corp.’s H20 AI chips, marking a major escalation in the ongoing U.S.-China technology conflict. The move challenges recent policies from the Trump administration and puts Nvidia, the world’s most valuable chipmaker, in a difficult position.

According to a Bloomberg report citing sources familiar with the matter, the Chinese government has instructed companies to avoid using Nvidia’s H20 chips for government or national security purposes.

The H20 chip was developed specifically for the Chinese market after the U.S. restricted sales of Nvidia’s most advanced AI chips to China.

This development comes just a day after Reuters reported that Nvidia and rival AMD agreed to give 15% of their revenue from selling certain AI chips to China to the U.S. government. That deal allowed sales of these chips to resume after a months-long ban.

China’s pushback appears to be driven by two main concerns. First, Chinese officials reportedly worry about potential security risks, such as location tracking or remote disabling features in the American chips—a claim Nvidia has denied. Second, Beijing aims to build its domestic semiconductor industry and reduce reliance on foreign technology.

The government has reportedly questioned companies on why they need to buy Nvidia’s chips when domestic options, like Huawei’s Ascend 910C, offer comparable or better performance.

The H20 chip was created amid the tech conflict. Designed as a less powerful version of Nvidia’s high-end chips to comply with U.S. restrictions, it was still valued by major Chinese tech firms such as Alibaba and Tencent. However, Tests show that Nvidia’s H20 chip works about as well as Huawei’s chips.