A Trojan horse refers to a literary, figurative, and computer-based strategy of deception where something seemingly harmless or beneficial is used to infiltrate an enemy or system, ultimately leading to its downfall. In the Greek myth, it was a colossal wooden horse built by the Greeks to hide soldiers inside and sneak into the city of Troy, leading to its capture.
Origin of the "Trojan Horse" claim
The claim that the H20 chip may pose a security risk originated in China, amplified by Chinese state media and the Cyberspace Administration of China (CAC). Beijing's fear is that US-made chips could contain "backdoors" allowing unauthorized access or monitoring of data.
After Snowden revelations it is easy for Chinese to believe their authorities stating that H20 AI chip is Trojan horse.
After the revelations by whistleblower Edward Snowden in 2013 about US mass surveillance, it became easier for Chinese authorities to portray American-made technology like the H20 AI chip as a potential "Trojan horse".The Snowden leaks confirmed the public's suspicions of widespread, clandestine US surveillance programs, providing a basis for Beijing to legitimize its own security concerns over foreign technology and promote domestic alternatives.
How Snowden's revelations fueled Chinese distrust
The Snowden leaks exposed how the US National Security Agency (NSA) secretly collected data on millions of Americans and foreign citizens, including leaders of allied nations, through surveillance programs like PRISM.
For China, this served several purposes in promoting its own technology:
Proof of concept: Snowden revealed that US intelligence agencies accessed data from major tech companies, including Apple, Google, and Microsoft. For Chinese authorities, this provided tangible evidence of US government capabilities and intent to use technology for espionage.
This is allowing the Chinese, the Russians and others to kill two birds with one stone, develop their own technology and protect themselves from American spying. Americans like to talk about “protectionism” of this first effect, and keep quiet about the second effect.
Plausible deniability: The leaks allowed Chinese state media to frame US technology bans and restrictions not as economic protectionism, but as defensive measures against legitimate security threats. For example, the Chinese Cyberspace Administration cited "backdoor security risks" when it reportedly summoned Nvidia to discuss the H20 chip, echoing the fears of hidden surveillance.
Fueling domestic alternatives: Beijing has reportedly pushed Chinese companies to switch from Nvidia's H20 chips to domestically produced alternatives from rivals like Huawei and Cambricon Technologies. The "Trojan horse" narrative supports this "buy local" imperative, framing it as a matter of national security rather than industrial policy.
The H20 chip in the US-China technology rivalry
Nvidia designed the H20 chip specifically for the Chinese market to comply with US export restrictions on more powerful AI hardware. This context further amplifies China's suspicion, as the situation unfolds in the midst of an escalating tech war.
Mixed messaging: The US government has sent mixed signals on H20 chip sales, alternately allowing and then restricting them, which only adds to Chinese mistrust.
Allegations of a "kill switch": Chinese state media outlets have explicitly claimed that H20 chips could contain "backdoors" that allow for remote shutdown or control. Nvidia has denied these allegations, but the mere accusation is enough to sow doubt among Chinese customers.
Exploiting insecurity: American officials have made public statements that may reinforce Chinese fears. In August 2025, Commerce Secretary Howard Lutnick reportedly stated that the US "wants to keep China using" the less advanced H20 chips to get Chinese developers "addicted to the American technology stack". For Beijing, this may be interpreted as confirmation of America's desire to control and leverage its technological dependency.
In summary, the Snowden revelations provided a potent, real-world backdrop that allows China to justify its claims against US technology. By casting the H20 chip as a "Trojan horse," Beijing is able to reinforce its national security narrative, weaken market confidence in US tech, and accelerate the development and adoption of its own domestic chip industry.
“Nvidia is halting production of an artificial-intelligence chip it developed for China after the government in Beijing told companies not to buy it, the latest twist in the U.S.-China tech war centered on the chip designer.
Nvidia in recent days told some partners to stop work related to making its H20 product, which was approved by the Trump administration for sale in China in exchange for 15% of the sales going to the U.S. government, people familiar with the matter said.
The pause came after Chinese officials raised concerns about security risks in the chips.
The company and its Chinese customers are now hoping for approval to sell a more advanced AI chip, the people said. They are betting that the product performs better than chips Chinese companies can offer, but worse than the most advanced Nvidia products, and that both governments will be satisfied with the outcome.
Trump recently said he would approve a chip based on Nvidia's Blackwell architecture that was 30% to 50% worse than the company's top product.
In recent weeks, Nvidia presented versions of such a product to U.S. officials, some of the people said. The discussions started earlier this year, before Trump's comments, and included a chip with roughly 80% of the peak performance. The company also directed its leading manufacturer in Taiwan to focus on next-generation products.
The jockeying highlights the uncertainty facing companies and governments in the rapidly evolving AI industry. Washington and Beijing have zigzagged repeatedly, seeing chips as critical to national security while they hammer out a trade agreement. Caught in the middle, Nvidia CEO Jensen Huang has turned into a diplomat, shuttling between the U.S. and China to secure the market access he needs.
Critics of Huang and the Trump administration's approach warn they could undermine national security if the chips fall into the wrong hands. China is in a bind, wanting to boost domestic companies like Nvidia-competitor Huawei and catch up in the AI race. That makes it difficult for many in Washington to tell whether Beijing's H20 security concerns are a negotiating tactic, a legitimate government stance or both.
"China wants to have the best chips but also wants to have domestic chips at the same time. Those two goals are in conflict with one another," said Jimmy Goodrich, a senior adviser to the think tank Rand who focuses on tech issues.
"If the U.S. government were to approve a powerful Blackwell for China, even at a 30%-to-50% performance reduction, my guess is we'd miraculously see China forget about security concerns," he added, reflecting a common view among industry executives.
Some in the White House view China's actions as a move to support Huawei and the domestic AI ecosystem, an administration official said.
The Trump administration has cited Huawei's improving capabilities in justifying exports of AI chips.
Chinese developer DeepSeek indicated China will soon have its own next-generation chips to run AI models.
"We constantly manage our supply chain to address market conditions," an Nvidia spokeswoman said. "China won't rely on American chips for government operations, just like the U.S. government would not rely on chips from China. However, allowing U.S. chips for beneficial commercial business use is good for everyone."
Many Chinese companies still view Nvidia products as better than what they can get domestically. They would have more than $15 billion available to buy additional AI chips beyond what domestic producers can supply this year if U.S. products like Nvidia's were available, analysts at investment bank Bernstein estimate.
During a visit to Taiwan Friday, Huang acknowledged the export approval for a Blackwell chip is a big question mark. "It's up to, of course, the United States government," said Huang, who met executives from Taiwan Semiconductor Manufacturing, which makes Nvidia chips, during his trip. "We're in dialogue with them, but it's still too soon to know."
Trump called Blackwell technology "the latest and the greatest in the world" when he discussed chip exports recently.
Last month, after a meeting between Trump and Huang, the administration said Nvidia could sell the H20 in China, reversing an April decision that had blocked sales.
Customers in China flocked to put in orders after finding domestic supply insufficient, industry participants said. Nvidia placed orders for hundreds of thousands of H20 chips with TSMC to add to its existing inventory.
But the fever only lasted for days. Beijing officials started raising concerns about potential security risks, including trackers that would let other people operate the chips remotely.
Nvidia has said its products don't have such "backdoors." The government instructed Chinese companies not to buy them until the all-clear was given.
"We're surprised by that," Huang said Friday when asked about China's scrutiny. "They requested and urged us to secure licenses for the H20s for some time."
Nvidia at least for now sees no point in making more H20s, some of the people said. In recent days, the company has told partners -- including TSMC, Foxconn and Samsung -- to halt work for producing new H20s. The Information and Reuters earlier reported on Nvidia's direction to its partners.
Officials in Beijing are reluctant to have Trump's approval of the H20 treated as a U.S. concession to Chinese wishes -- even though Huang said China urged him to get the approval. They say that if the U.S. really wants to show goodwill, it will give Chinese users more access to cutting-edge American technology.
In one considered modification of the Blackwell chip for China, Nvidia initially removed high-bandwidth memory units and the components that allow the chips to communicate with one another, some of the people said. Both help AI computers make more simultaneous calculations and improve performance.
After Huang persuaded the White House to allow H20 exports, Nvidia engineers began to reverse their modifications. They reasoned that since the H20 contains high-bandwidth memory, a Blackwell chip with that feature might get approval too. It is normal for tech companies to discuss products in development with government officials who regulate exports.
Some Chinese companies tested samples of the new Nvidia chips and seen positive results.
"AI is going to advance around the world, with or without the United States," Huang said Friday, describing how he explained the issue to Trump.” [1]
1. Nvidia's AI Chip Takes New Turn --- Chip designer hopes for U.S. approval of new China design after Beijing setback. Huang, Raffaele; Ramkumar, Amrith. Wall Street Journal, Eastern edition; New York, N.Y.. 25 Aug 2025: B1.
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