Nvidia has reportedly issued instructions to its component suppliers, including major players like Samsung Electronics and Amkor Technology, to cease all production activities associated with its H20 AI chip. This directive, as reported by The Information citing unnamed sources, comes on the heels of the Chinese government's urgent request to local companies to halt the use of the H20 chip, citing significant security concerns. Further corroborating these developments, Reuters separately reported that Nvidia also requested Foxconn to stop work related to the H20 chips.

This halt in production occurs despite recent developments where both Nvidia and AMD had secured approval from the US government to resume the supply of lower-end AI chips to China. This approval was contingent on a condition that required them to allocate 15% of the related revenue back to the US government. In the manufacturing chain for the H20 chips, Amkor Technology is known for handling the advanced packaging, while Samsung Electronics is a key supplier of the memory components.

Nvidia CEO Jensen Huang had previously and vehemently insisted that the H20 chipsets did not pose a 'national security concern' for the Chinese market. He was quoted by AFP stating, "We have made very clear and put to rest that H20 has no security backdoors, there are no such things, there never has, and so hopefully the response that we've given to the Chinese government will be sufficient." Huang also mentioned his efforts in assisting China to secure licenses for these chips: "As you know, [China] requested and urged us to secure licenses for the H20s, for some time and I’ve worked quite hard to help them secure the licenses, and so hopefully this will be resolved.”

However, the Chinese government's concerns intensified, leading its Cyberspace Administration to summon Nvidia representatives the previous month. The primary worry centered around the H20 chips potentially containing a tracking technology or a so-called “backdoor” that could enable remote operation by the United States. In response to these escalating concerns and pending a national security review, China reportedly instructed major domestic technology companies such as ByteDance, Alibaba, and Tencent to completely suspend all orders for Nvidia chips.