Chinese regulators have stepped up pressure on domestic companies to limit their reliance on U.S. artificial-intelligence chips, issuing guidance that discourages the use of Nvidia Corp.’s H20 processor and, in some cases, ordering a suspension of new purchases. Bloomberg reported that the Ministry of Industry and Information Technology recently circulated notices advising firms to avoid the H20, especially in government or national-security projects, while The Information said the Cyberspace Administration of China instructed tech giants to freeze orders until it completes a security review. Companies including Alibaba Group, ByteDance and Tencent Holdings were told to justify any need for the H20 over Chinese alternatives, according to people familiar with the directives. The notices stop short of a formal ban but add administrative hurdles that could slow deliveries and prompt buyers to switch to domestic chips made by Huawei or Cambricon. Beijing’s guidance also extends to Advanced Micro Devices’ MI308 accelerator, the reports said. The clampdown comes only weeks after Washington lifted export curbs on the H20 in exchange for Nvidia handing 15% of related revenue to the U.S. government, a deal intended to restore sales worth billions of dollars. Analysts at Bernstein now expect Nvidia’s share of China’s AI-chip market to fall to 55% this year, from 66% in 2024, as customers reassess orders amid regulatory scrutiny. Nvidia said the H20 “is not a military product or for government infrastructure” and denied allegations of backdoors that could allow remote tracking or shutdown. Nevertheless, local semiconductor suppliers gained on the news: Semiconductor Manufacturing International Corp. rose about 5% in Hong Kong trading, while Cambricon Technologies hit the 20% daily limit in Shanghai. The latest measures highlight the widening technology rift between Washington and Beijing despite the revenue-sharing arrangement and reinforce China’s campaign to accelerate adoption of home-grown chips in sensitive sectors.