Nvidia (NVDA) has stopped production of its H20 AI chip for the Chinese market. The move comes after officials in Beijing told companies not to buy the product due to security concerns. The decision marks another shift in the ongoing technology trade dispute between the United States and China. The news comes just days ahead of the company’s second-quarter earnings call on Wednesday, August 27.
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The H20 chip was designed to meet U.S. export rules, and earlier this year, the Trump administration approved its sale to China. That deal included a requirement that 15% of sales revenue go to the U.S. government. Following the approval, Chinese firms rushed to place orders, expecting to fill gaps in local supply. However, Beijing soon raised questions about potential risks, including the possibility of remote access, which Nvidia has denied. As a result, Chinese companies were told to hold off on purchases.
Nvidia Pauses H20, Eyes New Blackwell Chips
Now, Nvidia is focusing on new plans. The company and its Chinese partners hope for approval to sell a different chip that balances performance and compliance. This version would likely deliver less power than Nvidia’s top products but still offer better performance than chips from Chinese manufacturers. The company has presented versions based on its Blackwell architecture to U.S. officials. These designs have about 80% of the top performance and remove some advanced features. Washington has suggested that a product with 30% to 50% less power than Nvidia’s best chip could win approval.
The uncertainty highlights how important the Chinese market is for Nvidia. Analysts at Bernstein estimate that Chinese companies may have over $15 billion available this year to spend on AI chips beyond what local suppliers can offer. While Huawei and other firms are making progress, many buyers still view Nvidia products as superior for high-end computing.
Meanwhile, Nvidia has told its key partners, including Taiwan Semiconductor Manufacturing (TSM) and other suppliers, to pause work on new H20 units. The company is also steering production resources toward next-generation chips. CEO Jensen Huang said during a recent visit to Taiwan that discussions with U.S. officials are ongoing but that final decisions are still pending.
Is Nvidia Stock a Buy, Sell, or Hold?
On the Street, Nvidia continues to boast a Strong Buy consensus, based on 39 analysts’ ratings and 35 buys. The average NVDA stock price target is $198.97, implying an 11.79% upside from the current price.
For now, the future of Nvidia’s business in China remains unclear. The company continues to navigate a complex trade environment as both governments weigh technology needs against security goals. If approval comes for the modified Blackwell chip, Chinese demand could surge again. Until then, Nvidia must balance policy limits with its strategy for one of the world’s biggest markets.