Overview
Nvidia has instructed Foxconn, a major component supplier, to suspend backend processing work on the **H20 AI chip**, the most advanced artificial intelligence product currently allowed by U.S. export rules for sale to China[1][5]. This suspension represents a significant move amid shifting regulations and market dynamics.
Details of the Suspension
- Foxconn, officially Hon Hai Precision Industry Co Ltd, handles critical backend processing for Nvidia's chips[1].
- The directive comes as part of Nvidia's ongoing management of its supply chain to adapt to evolving market conditions and regulatory requirements[1].
- Nvidia did not provide further explanation, stating: *"We constantly manage our supply chain to address market conditions"*[1].
- Other suppliers, such as Amkor Technology and Samsung Electronics, have also been told to halt work on the H20 chip destined for the Chinese market[2].
Background: H20 Chip and Export Controls
- The H20 AI chip was created specifically for the Chinese market in response to 2023 U.S. export controls that restrict the sale of advanced semiconductors to China[4].
- After a temporary suspension in April, sales of the H20 resumed in July 2025, yet the chip has lost traction as Chinese companies increasingly turn to domestic alternatives, which generally lag in efficiency[4].
- Chinese firms, notably Huawei, are accelerating the development and adoption of local AI chips.
Nvidia's Next Steps in China
- Nvidia is developing a new AI processor for China, the **B30A chip**, which is based on the company’s Blackwell architecture[4].
- The B30A will offer higher performance than H20, but only about half the computing power of Nvidia’s flagship B300 dual-die accelerator[4].
- Samples of the B30A chip could be available for testing by Chinese customers as soon as next month[4].
Implications for the Market
- The United States continues to review and tighten export restrictions on advanced AI chips, citing security concerns and seeking to limit China’s access to top-tier semiconductor technology[4].
- Nvidia’s revenue from China comprised 13% of its total sales in the most recent financial year[4].
- The change underscores the growing complexity of global supply chains and the influence of geopolitical tensions on technology access and distribution.
About Foxconn and Nvidia
- **Foxconn** (Hon Hai Precision Industry Co Ltd) is a leading contract electronics manufacturer and a key supplier to global technology brands.
- **Nvidia** is a global leader in graphics processors, computing solutions, and AI infrastructure. Its products serve applications in data centers, gaming, automotive, and professional visualization[5].
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