China's Security Concerns Could Reshape the Global AI Chip Market

China's decision to summon Nvidia reflects a firm stance against potential security vulnerabilities in its chips. Experts believe that if these risks are confirmed, it could significantly impact the US company's global operations.

This action follows the Cyberspace Administration of China's summons of Nvidia regarding security concerns related to its H20 AI chip sold in China. According to industry experts, such actions align with international norms when addressing security issues.

One expert noted that if Nvidia's chips are found to have security flaws, it could be detrimental to the company. Concerns about remote shutdowns or data theft could lead users worldwide to seek alternative solutions.

Nvidia's current dominance in the AI chip market is not solely based on chip performance but also on its established CUDA ecosystem. While Chinese-made chips may compete technically, they lack the widespread compatibility of CUDA for AI models. However, if security concerns push users towards Chinese alternatives, developers might shift their focus to compatibility layers for domestic chips, potentially weakening Nvidia's ecosystem advantage.

Another expert believes that these security concerns could accelerate the adoption of Chinese chips. Although ecosystem shifts take time, this could ultimately undermine Nvidia's business.

Recently, allegations of serious security risks have been raised against Nvidia's AI chips, with some US lawmakers suggesting the inclusion of "tracking and positioning" functions in advanced chips exported abroad. While technically feasible, such features could severely damage Nvidia's business.

In response, Nvidia has stated that cybersecurity is a top priority and that its chips do not contain "backdoors" that would allow remote access or control.

This situation is not unprecedented. Last year, the Cyber Security Association of China called for a comprehensive review of products from Intel, citing cybersecurity vulnerabilities. Furthermore, a cyberattack on an earthquake monitoring center in Wuhan, China, was detected, involving the implantation of backdoor programs.