Bloomberg has learned about China's recommendations not to use Nvidia's H20 chips.

Chinese authorities have called on local companies to refrain from using Nvidia's H20 processors, especially in the public sector. This was reported by Bloomberg on August 12, citing sources.

"Over the past few weeks, Chinese authorities have sent notices to a number of firms preventing the use of less advanced semiconductors... The country's leadership was particularly categorically opposed to the use of H20 for any work by state—owned enterprises or private companies related to the government or national security," the article says.

There is no direct ban on the use of H20 in China. Local technology companies want to get these processors that work well in artificial intelligence (AI) applications. However, the government's calls create difficulties for Nvidia, which is trying to compensate for losses from restrictions on chip sales to China.

In addition, according to Bloomberg, Beijing's pressure on Nvidia will affect AMD, the manufacturer of AI accelerators. Both companies had previously received Washington's permission to supply simplified chips to China, subject to a 15% deduction of U.S. revenue. However, they are now facing opposition from Beijing.

However, Chinese companies may not be ready to switch to local semiconductors, Bloomberg adds. Homin Lee, senior macro strategist at Lombard Odier in Singapore, noted that chips from Chinese manufacturers are improving significantly in quality, but they may not be as versatile for the specific workloads that the Chinese artificial intelligence industry hopes to focus on.

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On August 10, the Financial Times newspaper reported on Nvidia and AMD's willingness to pay the United States 15% of the revenue from sales of their chips in China in order to obtain licenses for exporting semiconductors. Manufacturers will deduct this percentage to the United States authorities from Nvidia and AMD's MI308 chip models.

On August 9, the Bureau of Industry and Security of the US Department of Commerce issued a license to Nvidia technology company for exporting H20 chips to China. It was noted that Trump made this decision after Executive Director Jensen Huang visited the White House.

On August 7, Trump announced his intention to impose duties of 100% on imports of chips and semiconductors. Also, according to him, many companies are currently leaving their former locations and moving production to the United States.

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