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China Presses Tech Firms Over Nvidia H20 AI Chip Purchases Amid Security Concerns

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Chinese regulators have questioned major domestic tech firms, including Tencent, ByteDance, and Baidu, over their purchases of Nvidia’s H20 AI chips, sources told Reuters. The Cyberspace Administration of China (CAC) and other agencies asked companies to justify why they were opting for U.S. chips instead of domestic alternatives and raised concerns that data submitted to Nvidia for U.S. government review could expose sensitive client information.

While Beijing has not issued a direct ban on Nvidia’s H20, companies were cautioned about its use in government-related or security-sensitive projects. Bloomberg earlier reported that firms received official notices discouraging reliance on the chip, while The Information claimed ByteDance, Alibaba, and Tencent were ordered to halt purchases outright. These reports could not be independently confirmed by Reuters.

Nvidia defended the H20, stressing it is “not a military product or for government infrastructure,” while noting China has never relied on U.S. chips for government operations. The chipmaker designed the H20 specifically for China after U.S. export curbs in late 2023 restricted sales of its most advanced processors. Although Washington briefly banned its sale this year, the Trump administration reversed the decision in July, restoring limited access.

The scrutiny threatens a key revenue source for Nvidia, which made $17 billion from China last fiscal year — about 13% of its global revenue. State media have recently amplified criticism, portraying the H20 as technologically inferior and a security risk. Meanwhile, Chinese chipmakers like Huawei are working to produce domestic AI processors rivaling Nvidia’s offerings, though U.S. sanctions on advanced equipment remain a hurdle for large-scale production.

The tensions underscore Beijing’s push for self-sufficiency in semiconductors as Washington weighs tighter controls. U.S. President Donald Trump has hinted he may allow Nvidia to sell a scaled-down version of its Blackwell AI chip in China, even as concerns grow over the military applications of advanced AI. At the same time, an unusual deal now requires Nvidia and AMD to share 15% of China chip sales revenue with the U.S. government.

Baidu Unveils AI Video Generator and Major Search Engine Upgrade

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China’s Baidu (9888.HK) on Wednesday launched MuseSteamer, an AI-powered video generator designed specifically for business users, alongside a significant upgrade to its search engine features. MuseSteamer can produce videos up to 10 seconds long and is offered in three versions: Turbo, Pro, and Lite.

Over the last year, AI leaders like OpenAI and global tech giants have expanded beyond chatbots into text-to-video and image-to-video generation. In China, competitors including ByteDance, Tencent (0700.HK), and Alibaba (9988.HK) have also released similar models. Unlike many rivals such as OpenAI’s Sora that target consumers with subscription plans, Baidu’s MuseSteamer is currently focused solely on business users, with no consumer app available yet.

The search engine overhaul features a redesigned search box supporting longer queries, voice and image searches, and displays more relevant content powered by Baidu’s AI technology.

Baidu faces rising competition as AI chatbots like ByteDance’s Doubao and Tencent’s Yuanbao gain popularity in the Chinese market.

Baidu Says Homegrown Tech Shields AI Ambitions from U.S. Chip Curbs

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Chinese tech giant Baidu asserted on Wednesday that its artificial intelligence (AI) development remains largely insulated from recent U.S. semiconductor export restrictions, thanks to an expanding domestic supply of chips and software. The company also reported stronger-than-expected Q1 financial results, fueled by growth in its AI cloud segment.

“Domestically developed chips and increasingly efficient homegrown software will form a strong foundation for long-term innovation in China’s AI ecosystem,” said Shen Dou, Baidu’s Vice President, during a conference call with analysts.

The statement follows the latest U.S. curbs on advanced chips — including Nvidia’s H20, a product tailored for the Chinese market — which officially took effect last month. Baidu’s confidence mirrors that of rival Tencent, which recently cited existing chip stockpiles as a buffer against Washington’s tightening export controls.

Baidu’s first-quarter revenue rose 3% year-over-year to 32.45 billion yuan ($4.5 billion), surpassing analysts’ estimates of 30.9 billion yuan, according to LSEG. The company’s non-online marketing revenue, primarily driven by its AI cloud business, jumped 40% to 9.4 billion yuan, highlighting Baidu’s accelerating pivot away from its legacy ad-based search engine model.

While revenue from its online marketing segment fell 6% to 17.31 billion yuan — slightly below forecasts — Baidu posted a robust profit of 21.59 yuan per American Depositary Share, up from 14.91 yuan a year earlier.

Baidu has made aggressive moves in the generative AI space since becoming one of the first Chinese firms to launch a ChatGPT-style chatbot in early 2023. However, its flagship Ernie model now faces stiff competition from fast-rising domestic players like DeepSeek.

In response, Baidu scrapped subscription fees for premium AI chatbot services in April and launched enhanced models including Ernie X1 and Ernie 4.5, later upgrading both to “Turbo” versions. The company’s AI ambitions are powered by its self-developed P800 Kunlun chips, with a 30,000-chip cluster said to be capable of training DeepSeek-scale models.

Despite the upbeat earnings and AI momentum, Baidu’s U.S.-listed shares were slightly down 0.3% in Wednesday morning trading.