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Nvidia said on Thursday its products have no “backdoors” that would allow remote access or control after China raised concerns over potential security risks in the firm’s H20 artificial intelligence chip. The Cyberspace Administration of China, the country’s internet regulator, said it was concerned by a U.S. proposal for advanced chips sold abroad to be equipped with tracking and positioning functions. The CAC’s move cast uncertainty over the U.S. company’s sales prospects in China weeks after a U.S. export ban was reversed. The regulator said it had summoned Nvidia to a meeting on Thursday to explain whether its H20 AI chip had any backdoor security risks, as it was worried that Chinese user data and privacy rights could be affected. A backdoor risk refers to a hidden method of bypassing normal authentication or security controls. In a statement, an Nvidia spokesperson said, “Cybersecurity is critically important to us. Nvidia does not have ‘backdoors’ in our chips that would give anyone a remote way to access or control them.” The White House and both houses of U.S. Congress have proposed the idea of requiring U.S. chip firms to include location verification technology with their chips to prevent them from being diverted to countries where U.S. export laws ban sales. The separate bills and White House recommendation have not become a formal rule, and no technical requirements have been established. Nvidia has been a focus of U.S.-China relations, and China’s move comes shortly after the U.S. this month reversed an April ban on Nvidia selling the H20 chip to China. The company developed the H20 chip for the Chinese market after the U.S. imposed export restrictions on advanced AI chips in late 2023. “Nvidia chips are now dispensable for China. They can be easily put on the negotiating table,” said Tilly Zhang, an analyst with Gavekal Dragonomics. “China obviously has more courage and domestic substitution capabilities compared to previous years to not rely on overseas technology.” This month, Nvidia CEO Jensen Huang embarked on a public and effusive visit to China, where he sought to demonstrate his commitment to the Chinese market, met with government officials, and praised the country’s AI advances. The CAC statement did not elaborate on what backdoor security risks there could be or say what the Chinese government was considering doing as a result. Strong demand Charlie Chai, an analyst with tech- and consumer-focused 86Research, said Beijing’s warning was likely a symbolic stance against similar objections made by U.S. authorities. “However, we do not believe Beijing will make excessively harsh demands or introduce regulatory hurdles that will effectively drive Nvidia out of China, for the lack of alternatives. China still needs Nvidia chips for domestic research and applications,” Chai said. Nvidia’s products are highly sought after not just by Chinese tech companies but also by Chinese military bodies, state-run AI research institutes, and universities. The company last week placed an order with contract manufacturer TSMC for 300,000 H20 chipsets due to strong demand, Reuters reported. Chinese authorities and industry associations have in the past accused U.S. tech companies of posing security risks, with varying consequences. In early 2023, China barred key operators of the country’s infrastructure from purchasing from Micron, saying that a review it conducted had found the U.S. memory chipmaker’s products posed serious security risks. Last year, the Cybersecurity Association of China, an industry group, called for Intel products sold in China to be subject to a security review, but Chinese regulators have not publicly responded. Nvidia is also facing an antitrust investigation in China. The State Administration for Market Regulation announced late last year it was investigating the chipmaker over suspected violations of the country’s anti-monopoly law. The regulator said Nvidia was also suspected of violating commitments it made during its acquisition of Israeli chip designer Mellanox Technologies, under terms outlined in the regulator’s 2020 conditional approval of that deal. Beijing Newsroom, Reuters
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E-Commerce
Mexican President Claudia Sheinbaum said on Thursday that she secured a pause on new tariffs coming into effect and a 90-day period to work on a trade deal in a call with U.S. President Donald Trump. The agreement avoids the 30% tariffs that had been set to come into force on Friday. Speaking in a regular press conference after the announcement, Sheinbaum said the pause safeguards the U.S.-Mexico-Canada Agreement (USMCA) and means goods compliant with the pact will continue to be exempt from the 25% tariffs Trump imposed earlier this year due to the fentanyl crisis. Approximately 85% of Mexican exports comply with the rules of origin outlined in the USMCA, according to Mexico’s economy ministry. Economy Minister Marcelo Ebrard, speaking alongside Sheinbaum, said Thursday’s agreement brought the countries closer to securing a long-term trade agreement. “All of this was achieved without a single concession on Mexico’s part,” said Ebrard. “It’s a great achievement.” Both Sheinbaum and Ebrard stressed that the pause means Mexico continues to be one of the countries in the world with most preferential access to the U.S. market. Aida Pelaez-Fernandez, Brendan O’Boyle, and Emily Green, Reuters
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E-Commerce
Biotech giant Moderna announced it will lay off 10% of its workforce in a move CEO Stéphane Bancel called a difficult decision but necessary step forward, in an internal memo sent to employees today. The move sent Modernas stock price (NASDAQ: MRNA) tumbling over 5% through Thursday morning, and signals a further contraction of the once fast-growing business. I know this is a difficult moment for the company, Bancel said in the memo announcing layoffs. We all feel a range of emotions whenever we have to say goodbye to colleagues. Moderna declined to comment on which areas of the business would be most impacted by the workforce reduction. Moderna became a household name during the COVID-19 pandemic, when its mRNA vaccine became the second authorized for emergency use against COVID-19. At the time, it quickly scaled up its manufacturing capabilities and workforce to supply billions of vaccines in America and around the world. Since the pandemic, however, the biotech firm has struggled to maintain the size of its operation. In 2024, Modernas annual revenue was less than half of what it was in 2023$3.2 billion compared to $6.8 billion. This year, the company is seeing further decline. It brought in just $108 million in the first quarter, 35% less than the first quarter of 2024, as it faces mounting challenges from the federal government. Under Robert F. Kennedy Jr., the new secretary of the Department of Health and Human Services (HHS) and proponent of the anti-vaxxer movement, the HHS has taken aim at the mRNA vaccines Moderna specializes in. These vaccines work by introducing a piece of mRNA, a single-stranded molecule similar to DNA, that instructs cells on how to make a harmless version of a virus. The body then makes antibodies, proteins used by the immune system to annihilate harmful substances, that can fight off the real virus. Although mRNA vaccines are widely used, safe, and effective, those skeptical of the innovation have driven lawmakers to curtail the companies behind them. In May, the CDC revised its guidelines for COVID-19 vaccination and the FDA made it more difficult for vaccines to be approved. The second Trump administration also cancelled a $766 million contract with Moderna to develop a vaccine against influenza viruses, such as H5N1 bird flueven as the company announced positive early results. In response to uncertainty in the vaccine market and decreasing revenue, earlier this year, the company committed itself to reducing annual operating costs by $1.5 billion by 2027. The layoffs today are the next step in achieving that reduction, following a significant drop in R&D spending and limiting supplier and manufacturing costs. Despite slimming down the business, Bancel said the companys mission will remain unchanged and notes there are still opportunities to expand Modernas product line. The future of Moderna is bright, Bancel said in a memo to employees. We are sharpening our focus, becoming leaner, and staying ambitious in oncology, rare diseases, and latent viruses. Moderna is expected to report its Q2 financial results tomorrow.
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