Tensions are escalating between the United States and China over technology trade for quite some time. A casualty of the US-China trade war is the world’s most-valuable company — Nvidia. Recently, China reportedly asked domestic companies to scale back purchases of Nvidia’s H20 computer chip. The move comes in response to what Chinese officials have deemed “insulting” remarks by the US Commerce Secretary Howard Lutnick.Lutnick’s comments, made during a CNBC appearance in July, downplayed the Trump administration’s decision to ease some export controls on the H20 — a less powerful version of Nvidia’s advanced chips designed to comply with U.S. restrictions. “We don’t sell them our best stuff, not our second-best stuff, not even our third-best,” Lutnick stated, adding that the goal was to get Chinese developers “addicted to the American technology stack.”

China initiates regulatory crackdown

According to a report in the Financial Times, top Chinese officials viewed Lutnick’s remarks as a direct insult, triggering a swift regulatory crackdown. Agencies including the Cyberspace Administration of China and the Ministry of Industry and Information Technology are reportedly involved in the pressure campaign, which has already led some Chinese tech companies to reduce their H20 orders. One source told the FT that Lutnick’s speech “gives the coalition [of regulators] one more reason to intensify its efforts to push tech firms to use China’s own chips.” This effort signals a growing push for technological self-sufficiency in China, with the government’s long-term strategy of reducing reliance on foreign technology accelerating in the face of perceived disrespect and ongoing trade disputes. The situation highlights the delicate balance between commercial interests and national security concerns, as both countries vie for supremacy in critical technology sectors.

Nvidia responds, urges commercial use

Nvidia has defended the sale of the H20 chip, with a spokesperson emphasizing that the chip is not a military product. “China won’t rely on American chips for government operations, just like the U.S. government would not rely on chips from China,” the spokesperson said in a statement. “However, allowing U.S. chips for beneficial commercial business use is good for everyone.”The Commerce Department has not yet commented on the matter. The dispute unfolds as U.S. and Chinese officials continue complex trade discussions, and as Nvidia and fellow chipmaker AMD have agreed to pay a 15% revenue share to the U.S. government from their chip sales in China to secure the necessary export licenses. This incident underscores the fragile nature of tech diplomacy and the fierce competition driving the global AI race.