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China halts Nvidia H20 orders after U.S. “addiction” comments discovered
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China has suspended new orders for Nvidia’s H20 chips following inflammatory comments by U.S. Commerce Secretary Howard Lutnick, who publicly stated that America’s strategy was to get Chinese developers “addicted” to weaker U.S. technology. The move threatens Nvidia’s revenue stream from a market that represents at least 15% of the company’s total sales and accelerates the tech decoupling between the world’s two largest economies.

What triggered the restrictions: Lutnick’s mid-July 2025 televised remarks proved to be the catalyst for China’s swift regulatory response.

  • “We don’t sell them our best stuff, not our second-best stuff, not even our third-best,” Lutnick told CNBC. “You want to sell the Chinese enough that their developers get addicted to the American technology stack, that’s the thinking.”
  • Chinese officials viewed these comments as both “insulting” and unnecessarily arrogant, prompting regulators including the Cyberspace Administration of China and the Ministry of Industry and Technology to advise firms to halt new H20 orders by late July 2025.

The big picture: The H20 chip had become a crucial compromise product that allowed both countries to maintain some level of tech cooperation while navigating export restrictions.

  • The H20 was specifically developed for China after export controls restricted access to Nvidia’s more advanced models, serving as a key product for local AI firms.
  • A framework agreement earlier in 2025 had allowed H20 sales to resume while Beijing restored rare earth exports, suggesting progress toward stabilizing relations.
  • Lutnick’s remarks have now unraveled this delicate balance, highlighting how political statements can rapidly alter corporate fortunes in the tech sector.

Why this matters for Nvidia: The restrictions pose serious challenges for a company that has long viewed China as a major market.

  • China accounts for at least 15% of Nvidia’s total revenue, making any disruption to H20 orders a significant financial threat.
  • Nvidia CEO Jensen Huang recently visited Beijing to stress the firm’s commitment to staying competitive in the region, but regulatory headwinds now present sustained sales challenges.

China’s domestic alternatives face limitations: Beijing is promoting domestic chips, including those from Huawei, but their effectiveness remains questionable.

  • DeepSeek had to delay the launch of its new R2 model after difficulties training with Huawei Ascend processors.
  • Chinese tech giants like Alibaba, Baidu, and ByteDance have been reluctant to fully switch from Nvidia hardware, citing stronger performance compared with local alternatives.
  • Whether Chinese firms can scale up to fill the gap remains uncertain, creating potential bottlenecks for the country’s AI development.

What’s next: The episode illustrates how quickly geopolitical tensions can reshape technology markets, with decoupling potentially unfolding faster than industry analysts initially expected.

From arrogance to backlash, one US remark triggers China’s Nvidia clampdown and escalates the global technology power struggle

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