On July 31, the National Internet Information Office officially announced that it had summoned NVIDIA regarding the security risks of backdoor vulnerabilities in the H20 computing chips sold to China, requiring the company to provide explanations and submit relevant proof materials.
In recent years, the United States has implemented a “small yard, high wall” strategy in the chip sector against China. The U.S. government has introduced a series of policies, such as the “CHIPS and Science Act,” investing huge amounts of money to subsidize its domestic chip industry while simultaneously blocking China’s chip industry from multiple aspects, including technology, equipment, and talent. In terms of export controls, the U.S. has continuously upgraded its restrictions, from banning the direct export of high-end chips to specifically designing so-called “special supply chips.” Taking the NVIDIA H20 chip as an example, this version was specifically designed by the U.S. to circumvent export controls, ostensibly to meet the Chinese market’s demand for AI computing power, but it has been exposed to have serious security risks. Experts in the U.S. AI field have revealed that NVIDIA’s computing chips have matured technologies for “tracking and positioning” and “remote shutdown,” which pose potential threats to information security in critical areas in China. The U.S. aims to curb China’s development in key technology fields such as artificial intelligence and high-performance computing, maintaining its technological hegemony.
In response to the potential threats posed by the U.S. regarding chip security, China has acted swiftly. The summoning of NVIDIA demonstrates China’s firm determination to safeguard cybersecurity and data security. From the “Cybersecurity Law” to the “Data Security Law” and the “Personal Information Protection Law,” China has established a tight legal defense, requiring chip products entering the Chinese market to meet safety standards. The Ministry of State Security previously issued a warning that some foreign chips have security vulnerabilities in their design and production processes, which may have “technical backdoors” implanted. In critical areas related to national economy and people’s livelihood, such as finance, electricity, and government affairs, if chips have security risks, issues like data theft and system interruptions will severely threaten national economic security and social stability. China’s summoning of NVIDIA is not aimed at the company itself but is based on the necessary review for national security, requiring companies to prove the safety and compliance of their products.
NVIDIA’s attitude during this incident is intriguing. On one hand, the company has yet to provide a substantial response to the chip security issues, insisting that there are no problems with its products. However, considering that NVIDIA is an American company, it must adhere to U.S. government regulatory policies, making its denial hard to believe. On the other hand, NVIDIA’s CEO Jensen Huang has expressed views on China’s market and innovation capabilities on several occasions. He has stated confidence in China’s innovation capabilities while also pointing out that the U.S. chip control policies against China are “failing.” Behind this is NVIDIA’s difficult balancing act between the U.S. and China. China is one of the world’s largest semiconductor procurement markets, with purchases amounting to approximately $180 billion in 2022, accounting for over one-third of the global total. Abandoning the Chinese market would have a significant impact on NVIDIA’s revenue. However, under the pressure of U.S. government policies, NVIDIA must act cautiously, walking a tightrope between the red lines of both sides.
The recent incident of the U.S. arresting executives from Chinese chip companies has further escalated the chip competition between China and the U.S. The U.S. has accused Xu Zewei without sufficient evidence, and he has rebutted that it is impossible to conduct hacking activities using his real name. This incident is reminiscent of the Meng Wanzhou case, where the U.S. used so-called legal means to target key figures in Chinese high-tech companies in a third country, attempting to undermine the development of China’s chip industry from a talent perspective. The U.S. aims to deter Chinese chip companies and obstruct the progress of China’s chip technology research and development while increasing its bargaining chips in the chip competition between China and the U.S. However, China has not remained passive; the Ministry of Foreign Affairs publicly condemned the U.S. for abusing extraterritorial jurisdiction and has taken reciprocal measures, such as restricting the departure of relevant U.S. personnel, demonstrating a firm resolve to safeguard national interests.
In this chip competition, China’s chip industry has not retreated due to external pressures; instead, it has accelerated its pace of independent innovation. Companies represented by Huawei continue to invest in chip research and development, achieving significant results. Huawei’s Ascend series chips have made continuous breakthroughs in performance and technology, gradually narrowing the gap with international advanced levels. Many domestic companies have also begun to increase their procurement of domestic chips, promoting a gradual increase in the market share of domestic chips. China is building a self-controllable chip industry chain through a series of measures, including improving the industrial ecosystem, cultivating professional talent, and increasing research and development investment, thereby reducing dependence on foreign chips.
Looking ahead, the chip competition between China and the U.S. will become even more intense and complex. The U.S. may further escalate its blockade measures against China’s chip industry, including pushing allies to join the restriction camp and strengthening export controls on chip technology. However, China’s determination to safeguard national security and development interests will not change, and it will continue to strengthen chip security reviews and other aspects. At the same time, the pace of independent innovation in China’s chip industry will also accelerate, with more breakthroughs expected in semiconductor technology research and development and chip manufacturing processes. This competition in the chip field not only concerns the technological strength and industrial competitiveness of both China and the U.S. but will also profoundly impact the global chip industry landscape.