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Investing.com-- NVIDIA Corporation (NASDAQ:NVDA) has asked some component suppliers to halt production of its China-specific H20 artificial intelligence chip, amid increased scrutiny towards the chip from Beijing, The Information reported on Thursday.
Shares in the chipmaker slipped 1.2% in premarket trading Friday as of 04:14 ET (08:14 GMT).
Chinese authorities had earlier in August asked several local AI developers, including majors such as Tencent (HK:0700) and ByteDance, to justify their purchases of the chips, while also expressing concerns over potential security risks posed by the H20.
Investing.com could not immediately verify the report.
The H20-- which was developed in line with Biden-era restrictions on AI tech exports to China-- is wildly popular among local AI developers.
Chinese sales of the chip were restricted by the U.S. government earlier this year, amid a bitter trade war between the two countries. Nvidia was in late-July allowed to resume its H20 sales in China, as Washington and Beijing dialed down their trade conflict.
But Beijing was seen expressing increased scrutiny towards Nvidia and American-made chips in recent weeks. The Financial Times reported on Wednesday that this scrutiny stemmed from seemingly insulting comments made by U.S. officials on trade with China.
Beijing also expressed concerns that Nvidia’s chips contained remote controls and posed security risks-- allegations that Nvidia has repeatedly denied.
The company still sees China as a major market, with CEO Jensen Huang recently visiting the country and meeting with top government officials.
(Ambar Warrick contributed to this report.)