China tells tech giants to halt Nvidia H20 orders after U.S. official’s ‘addiction’ remark — Chinese leaders call Lutnick's comments 'insulting'

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'You want to sell the Chinese enough that their developers get addicted to the American technology stack.’ — Sec. Lutnick

Nvidia Hopper H100 die shot
(Image credit: Nvidia)

Although China has been trying to move away from foreign chips for several years now, the Financial Times says that this effort has now intensified after being fueled by U.S. Commerce Secretary Howard Lutnick saying the aim was to make China "addicted" to US tech during an interview after Washington allowed Nvidia to resume the sales of its H20 to the country, using a term that holds signifcant cultural undertones in China.

“We don’t sell them our best stuff, not our second-best stuff, not even our third-best. I think fourth best is where we have come out that we’re cool,” Lutnick said during the July 15 CNBC interview. He also added, “So you want to sell the Chinese enough that their developers get addicted to the American technology stack. And that’s the thinking.”

These remarks caught the ire of Chinese authorities, with some of the country’s senior leadership calling it “insulting.” Furthermore, the “addiction” connotation brings back memories of the Opium Wars, when Britain forced China to legalize the drug, leading to an addiction epidemic in the country and the loss of territory to foreign powers, including Hong Kong, the Kowloon Peninsula, and Outer Manchuria. This event is particularly raw among Chinese historians and is often marked as the start of its “Century of Shame.”

China has directed its regulatory bodies, including the Cyberspace Administration of China (CAC), the National Development and Reform Commission (NDRC), and the Ministry of Industry and Information Technology (MIIT), to find ways to force Chinese tech institutions to move away from buying Nvidia H20 chips. The Financial Times says that companies have been holding off on purchases and reducing their orders for Nvidia’s AI GPUs because of this.

Nevertheless, it’s unlikely that the American AI giant will be completely supplanted by its domestic rivals anytime soon. Although competitors like Huawei and Cambricon are capable of producing chips that, on paper, can compete with what Nvidia has to offer for specific applications, the latter’s tech stack is still the primary reason why Chinese tech companies are hesitant to move away from it.

Jowi Morales
Jowi Morales
Contributing Writer

Jowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.

11 Comments Comment from the forums
  • setx
    Nice move. Even if their domestic solutions are half as power efficient it would be well worth it at the level of country.
    Reply
  • bit_user
    Not to defend the Secretary's remark, but I think China's reaction just amounts to noise. I doubt we'll see even a blip in actual deliveries.

    From what I recall, H20 orders have a fairly substantial backlog. So, even if there's a blip in the rate of new orders, it's not likely a cause for concern to Nvidia.
    Reply
  • Exploding PSU
    I head Gamers Nexus made a video about this recently. I couldn't find it, unless it was buried somewhere or it really was backer exclusive material.
    Reply
  • pug_s
    If Nvidia make a specialized silicon for the Chinese market, they can easily slip in a backdoor or something to the GPU. If US government is so concerned about selling the latest and greatest to the Chinese market, Nvidia could've sold the binned version of the same silicon and can escape scrutiny.
    Reply
  • baboma
    >I head Gamers Nexus made a video about this recently. I couldn't find it, unless it was buried somewhere or it really was backer exclusive material.

    They took it down for whatever reason. Probably because it was seriously bloated, over 3 hours long. Burke needs to work on his editing, or hire somebody to do it.

    Edit: A Perplexity query says that the video was removed by a DMCA takedown from Bloomberg. It'll likely be re-edited to remove the offending part and re-uploaded. GN said they spend $100K on this, so they need to recoup the expense.

    6RJvrTC6oTI:2View: https://youtube.com/watch?v=6RJvrTC6oTI&t=2s
    I only saw part of it, enough to get the gist. The gist is that China has a thriving black market in Nvidia GPUs. It's not illegal over there, so everyone--from smuggler to middleman to end user--talks about it openly. You can get most any GPU you want, just not in high volume. China's manufacturing prowess means GPUs like 5090 are regularly retrofitted for AI use, viz adding more RAM or blower-style fans.

    For those who know anything about Asia, black markets are the norm, so it wasn't anything revelatory. What was enlightening for me was listening to the conversations to get a gauge of the Chinese attitude on AI, where they are and where they are going.

    That doesn't mean the US GPU ban isn't having an effect. It is. But when you have a motivated country with manufacturing might and gobs of AI engineers, it won't be long before China catches up.

    China's open LLMs are already better than US' open models in many respects. Just head over to r/localllama to find out. DeepSeek was the main reason why OpenAI released the two GPT-oss models, to grab back some mindshare. Other Chinese models like Qwen, GLM, etc are the rage.
    Reply
  • Valkyr09
    baboma said:
    >I head Gamers Nexus made a video about this recently. I couldn't find it, unless it was buried somewhere or it really was backer exclusive material.

    They took it down for whatever reason. Probably because it was seriously bloated, over 3 hours long. Burke needs to work on his editing, or hire somebody to do it.

    Edit: A Perplexity query says that the video was removed by a DMCA takedown from Bloomberg. It'll likely be re-edited to remove the offending part and re-uploaded. GN said they spend $100K on this, so they need to recoup the expense.

    6RJvrTC6oTI:2View: https://youtube.com/watch?v=6RJvrTC6oTI&t=2s
    I only saw part of it, enough to get the gist. The gist is that China has a thriving black market in Nvidia GPUs. It's not illegal over there, so everyone--from smuggler to middleman to end user--talks about it openly. You can get most any GPU you want, just not in high volume. China's manufacturing prowess means GPUs like 5090 are regularly retrofitted for AI use, viz adding more RAM or blower-style fans.

    For those who know anything about Asia, black markets are the norm, so it wasn't anything revelatory. What was enlightening for me was listening to the conversations to get a gauge of the Chinese attitude on AI, where they are and where they are going.

    That doesn't mean the US GPU ban isn't having an effect. It is. But when you have a motivated country with manufacturing might and gobs of AI engineers, it won't be long before China catches up.

    China's open LLMs are already better than US' open models in many respects. Just head over to r/localllama to find out. DeepSeek was the main reason why OpenAI released the two GPT-oss models, to grab back some mindshare. Other Chinese models like Qwen, GLM, etc are the rage.
    The video is up on rumble
    Reply
  • bit_user
    pug_s said:
    If Nvidia make a specialized silicon for the Chinese market, they can easily slip in a backdoor or something to the GPU.
    Unlikely. At least for training, these GPUs would probably be on a heavily-restricted subnet. The value of a backdoor, in that context, would be very limited.

    pug_s said:
    If US government is so concerned about selling the latest and greatest to the Chinese market, Nvidia could've sold the binned version of the same silicon and can escape scrutiny.
    I think they can't get away with substantial binning, for this sort of product. Every unit needs to perform up to spec.
    Reply
  • Tillinghast
    Historical blindness is very on-brand for the US admin; the framing of the use of Nvidia chips as an equivalent to 'opium addiction' will unnecessarily enrage the Chinese to double-down on catching up and passing Western tech. As if they needed more incentive.
    Reply
  • terzfiend
    Clearly this is smoke and mirrors. The only way they would suspend orders is if they have something close to the H20. The comments from Lutznick were innocuous at best. Free trade type stuff that Chinese have said for centuries, as have all business oriented people. Don't believe the hype, they have an AI processor up their sleeze that will be coming out soon.
    Reply
  • ivan_vy
    Chinese market will slowly tend to separate from western suppliers, government won't, they need the best, baddest chips around and will happily smuggle all they can, so a double hit for american companies.
    Reply