China Sets 70% Local AI-Chip Goal as Officials Target Nvidia’s H20

Several large Chinese municipalities have instructed state-backed projects to procure at least 70 percent of their artificial-intelligence accelerator chips from domestic suppliers, according to official notices circulated this week. The guidance, part of a broader push for technological self-reliance, explicitly aims to reduce dependence on Nvidia hardware. The new targets follow a regulatory campaign in Beijing urging internet groups—including Alibaba, ByteDance, Tencent and Baidu—to curb purchases of Nvidia’s H20 processors after U.S. Commerce Secretary Scott Lutnick described Chinese access to the chip as a concession, remarks officials called “insulting.” Regulators have not imposed a formal ban, but state media have questioned the security of the U.S. parts. Industry executives say demand for the H20 remains strong because the chip is cheaper and more power-efficient than many Chinese alternatives and because Nvidia’s CUDA software ecosystem is hard to replace. Nonetheless, the official pressure adds uncertainty for Nvidia, which only regained permission to ship the throttled-down processor to China this month under a deal that requires it to remit 15 percent of related revenue to the U.S. government. In Washington, policy analysts warn that fresh attempts to block sales of what the Commerce Department calls “second-tier” chips could do little to slow China’s AI ambitions while eroding U.S. companies’ market share. The evolving stance on both sides underscores how political frictions continue to reshape the global semiconductor industry.