China’s Internet regulator has banned domestic technology companies from buying artificial intelligence (AI) chips from Nvidia.

According to a report from the FT, the Cyberspace Administration of China (CAC) this week told companies including ByteDance and Alibaba to cancel orders of and stop testing Nvidia’s RTX Pro 6000D chips, an AI inferencing chip designed specifically for the Chinese market.

Companies that had already started testing and verification with Nvidia’s server suppliers immediately halted the work after receiving the order, the report added.

It follows a directive issued by the Chinese government in August, mandating publicly owned domestic data center companies to source more than 50 percent of their chips from domestic producers. That directive came after the government made claims that Nvidia’s H20 chips – a less sophisticated version of Nvidia’s H100 processors – posed a national security threat, expressing concerns about backdoor access being inserted into the semiconductor.

Speaking after the guidance against the H20 chips was released, Nvidia CEO Jensen Huang said: “Recently, China asked some questions about some security backdoors in our chips. We have made very clear and put to rest that H20 has no security backdoors. There are no such things. There never has been. And so hopefully, the response that we've given to the Chinese government will be sufficient. We're in discussions with them."

He added that he was in discussions with the Chinese government regarding their concerns, adding he was hopeful they would be able to resolve the issue, saying he was surprised that the government raised such concerns, as they’ve long been pushing for the licenses to be approved.

Nvidia was only granted permission from the US government to start shipping H20 chips to China in July, on the condition that the company would pay the government 15 percent of the revenue generated by sales of the chip.

While no H20 sales to China-based customers were made in Q2 2026, Nvidia reported it “benefited from a $180m release of previously reserved H20 inventory, from approximately $650m in unrestricted H20 sales to a customer outside of China.”

However, following the publication of its Q2 results, Nvidia issued an updated outlook for its third quarter that also assumed no H20 shipments for the upcoming quarter.