Description: China’s Cyberspace Administration (CAC) has raised security concerns over Nvidia’s H20 chips, citing data privacy and national security concerns. Nvidia became the centerpiece of the US – China trade dispute as the US recently reversed its decision to ban chip exports to China as part of the initial concession in the trade talks. Nvidia’s CEO, Jensen Huang this month visited China and met with government and company executives in order to raise the company’s profile in the country and incentivize investment opportunities. The regulator called Nvidia’s executives to a meeting where they would have to explain whether the company incorporated backdoor programs as per the recent initiative by the US Congress to enforce the incorporation of tracking technology in US chip exportations in order to prevent resale to countries which are banned from acquiring the technology.
Impact: China’s regulatory repression on US chip exports arrives after the stalled round of trade negotiations in Stockholm and represents a political move signaling the country’s leveraging options in the trade negotiations. China and the US recently surpassed a critical disputed point in their bilateral trade negotiations with China relaxing export of rare earth elements in return for access to the US high tech industry. The latest round of trade talks delivered no conclusive results or any structural progress with both countries agreeing to informally extend the tariff imposition deadline. China’s regulatory pressure on Nvidia coupled with yesterday’s announcement of facilitating economic assistance to countries mostly impacted by US tariffs, is aimed at improving the country’s negotiating position in future trade talks and signals potential escalation of the bilateral trade war.