Nvidia Faces China Scrutiny Over H20 Chip Security as US Lawmakers Pushed for Tracking Features

TradingKey - On July 31, Cyberspace Administration of China announced that it had summoned Nvidia (NVDA) to address concerns regarding security risks and backdoor vulnerabilities in its H20 computing chips sold to China. The administration requested that the company provide an explanation and submit relevant proof materials.

The Cyberspace Administration noted that US lawmakers had previously advocated for advanced chips exported from the United States to be equipped with tracking and positioning capabilities. According to a Reuters report in May, US lawmakers had proposed the "Chip Security Act," which mandates that AI chips and products containing these chips should include location tracking systems to monitor their transfer and prevent smuggling, particularly to address issues of chips being illicitly exported to China in violation of US export controls.

Furthermore, the administration highlighted that American AI experts have disclosed that Nvidia's computing chips already have matured "tracking" and "remote disabling" technologies. 

According to Reuters, US Congressman and particle physicist Bill Foster stated that the technology to track chips post-sale is already available and largely embedded in Nvidia's chips. The report also mentioned sources indicating that, for security reasons, Google is already tracking the location of its internal AI chips and other chips within its data center networks, demonstrating the application of this technology.

Recently, some US lawmakers criticized the Trump administration's decision to allow the sale of Nvidia's H20 chips to China, terming it a strategic blunder that could jeopardize US economic and military superiority in the AI domain.

In the afternoon, chip stocks surged across Hong Kong and A-share markets. In the Hong Kong stock market, SMIC rose over 5% at one point, and Hua Hong Semiconductor (01347.HK) nearly 6%. In the A-share market, Cambricon Technologies (688256.SH) soared over 7%, while Hua Hong Semiconductor (688347.SH) increased by more than 4%.