Nvidia is in talks with the U.S. government about shipping a new, more advanced chip to China, CEO Jensen Huang said on Friday.

Earlier this week, Reuters reported the U.S. tech giant is developing a new artificial intelligence chip for China, dubbed the B30A, that will be more powerful than the H20 — the only semiconductor Nvidia is allowed to sell in the country at present. The U.S. has grown concerned in the past few years that advanced American chips could be used in Chinese military applications.

A journalist asked Huang about the B30A during a trip to Taiwan.

“Offering a new product to China for the data center, AI data centers, the follow on to H20, that’s not our decision to make. It’s up to of course the United States government. And we are in dialogue with them. But it’s too soon to know,” Huang said in response.

Last month, Huang said he hopes that Nvidia can sell more advanced chips in China than the H20 during a visit to the country.

Nvidia’s position in China has become a headache for Huang. The company created a special, less-advanced chip for China called the H20, which this year the U.S. government restricted for export. In July, Nvidia said it had given permission to sell this chip again in China. Later, it was revealed that Nvidia will give 15% of its China chip sales to the U.S. government in exchange for export licenses.

Just as it appeared that Nvidia was back in China, it hit other roadblocks, with Chinese authorities raising concerns this month about potential security vulnerabilities in the company’s chips. Nvidia said its products do not have “kill switches and backdoors” built into them.

Several reports this month have suggested that the Chinese government has urged local companies not to use Nvidia chips.

Huang has argued that Nvidia should be allowed to sell its chips to China, so that the country’s AI is built on American technology and domestic tech giants like Huawei don’t fill the void.

That message appeared to get through to Washington. In July, when the H20 was approved for export again, U.S. Commerce Secretary Howard Lutnick told CNBC that the move was allowed because Nvidia would not be giving over its best technology.

“We don’t sell them our best stuff, not our second best stuff, not even our third best,” Lutnick said.

However, the Financial Times reported on Thursday that these comments were seen as “insulting” by Chinese officials and that local regulators are moving to dissuade domestic firms from buying the H20.

A report by the The Information on Friday said that Nvidia has asked some of its component suppliers to stop production related to the H20 graphics processing units.

The company’s shares were down 1.34% in premarket trading at 5:53 a.m. E.T.

– CNBC’s Dylan Butts contributed to this report.

Chinese artificial intelligence startup DeepSeek has hinted that China will soon have homegrown “next generation” chips to support its AI models, while announcing an update to one of its large language models. 

In a comment under a post on its official WeChat account, DeepSeek said the “UE8M0 FP8” precision format of its newly released model V3.1 is tailored for the next-generation domestically built chips that will be launched soon.

FP8, or 8-bit floating point, is a data processing format that can boost the computational efficiency for training and inference of large deep learning models.

DeepSeek’s mention of China’s coming next-generation chips may signal plans to work more closely with China’s emerging AI chip ecosystem in the face of Washington’s advanced semiconductor export restrictions and Beijing’s push for chip self-sufficiency.

The comments come about two weeks after Beijing reportedly urged Chinese AI developers to use domestic alternatives to Nvidia’s graphics processing units used in AI training. While analysts say China’s domestic AI chipmakers lag behind Nvidia in technological advancement and scale, players like Huawei have been making progress.

In its Thursday post, DeepSeek did not disclose the chips it used to train the V3.1, or what local chips the UE8M0 FP8 might be compatible with.

DeepSeek shook up the tech world earlier this year after it released its R1 reasoning model, which demonstrated capabilities comparable to those of Western competitors like OpenAI, despite U.S. export controls restricting it from using Nvidia’s most advanced AI training chips.

Prior to that, in December, the company released its V3 model, which it said had been trained on about 2,000 of Nvidia’s less advanced chips.

Following DeepSeek’s model breakthroughs, the U.S. further tightened export restrictions in April, effectively banning Nvidia’s H20 chips, which had been specially designed to meet prior export restrictions on China. 

Last month, officials from the Trump administration said they planned to allow Nvidia to resume shipping the chips to China. However, the H20s are now being met with scrutiny in China, with regulators reportedly mandating companies against buying the chips until a national security review is completed.

Chip analysts have told CNBC that companies like Huawei that have been seeking to build an alternative AI chip ecosystem in China could benefit from a lack of Nvidia’s H20s in the market. 

DeepSeek said Thursday that its V3.1 came with “major changes,” including faster response times, and a hybrid reasoning architecture that allows the model to support both reasoning and non-reasoning modes. Reasoning models can execute more complicated tasks through a step-by-step logical thought process.

Starting Sept. 6, the company will also adjust the pricing for using the model’s API, which allows developers of other apps and web products to integrate DeepSeek on their platforms. 

Nvidia CEO Jensen Huang on Friday showered praise on Taiwan Semiconductor Manufacturing Co. on a visit to Taiwan, saying that anybody looking to take a stake in the company would be “very smart.”

This comes at a time when the U.S. administration has signaled interest in acquiring stakes in tech companies, especially those in receipt of funding under the U.S. CHIPS Act.

Huang, who said the main purpose of his trip to Taiwan was to thank TSMC for their work on Nvidia’s Rubin, its next-generation AI chip platform, made the remarks in response to a query on Washington looking to take a stake in TSMC. 

“Well, first of all, I think TSMC is one of the greatest companies in the history of humanity, and anybody who wants to buy TSMC stock is a very smart person,” he said. 

Huang said TSMC was making six new products for Nvidia, including a new central processing unit, a hardware component used for computation, and a new general processing unit, used for advanced computation, especially AI.

Earlier this week, Reuters had reported that U.S. Commerce Secretary Howard Lutnick was looking at equity stakes in exchange for CHIPS Act funding for companies such as Micron, TSMC and Samsung. 

The 2022 CHIPS Act, passed with bipartisan support under the Joe Biden administration, has seen grants and loans awarded to chipmakers expanding production in the U.S. as part of efforts by Washington to revitalize U.S. leadership in semiconductor manufacturing. TSMC had been promised $6.6 billion under the act to help build its three cutting-edge chip fabrication plants in Arizona.

Lutnick confirmed in an interview with CNBC on Tuesday that the government was in talks to take a 10% equity stake in troubled semiconductor company Intel, and said the administration might consider stakes in other firms as well.

A report from the Wall Street Journal on Thursday, however, said the government had no plans to seek shares in semiconductor firms that were increasing their U.S. investments, citing a government official. TSMC, in March, announced an expansion of its Investment in the United States to $165 billion.

Separately, Huang said that Nvidia was eager to begin work on “NVIDIA Constellation” — a recently announced new Taiwan office for the company to house its growing Taiwan workforce.

Huang said the company was still working with the local government to resolve some issues to start its construction. 

“We have many, many employees here in Taiwan, and we’re growing here in Taiwan because our supply chain is so busy here.” 

“We’re working with chip companies, system vendors and system makers all over Taiwan, and everybody is working so hard for us and so we need a lot of engineers to work alongside them,” he added.

Shares in TSMC, the world’s largest contract chip manufacturer, have gained 6.5% so far this year.

Separately, news reports on Friday said Nvidia had asked some of its component suppliers to stop production related to its made-for-China H20 general processing units, after China raised security concerns over the chips. 

Last month, Nvidia said it expected to receive an export license for its H20 chips, which had been effectively banned in April. However, Beijing has reportedly placed a freeze on local company’s ability to buy them.

According to Reuters, one of the companies told to pause their work in relation to the H20 chips was Taiwan’s Foxconn — also known as Hon Hai Precision Industry. Foxconn did not respond to an inquiry from CNBC on the matter.

Huang on Friday said that the company had responded to Beijing’s concerns regarding its H20s and was hoping that the issue would be resolved.