Nvidia has told key suppliers, including Samsung Electronics and Amkor Technology, to stop production work related to its H20 AI chip, according to a report from The Information.

The H20, a less-powerful version of Nvidia’s flagship AI accelerators, was designed specifically for the Chinese market following US export restrictions. But Beijing has recently discouraged local firms from using the chip, urging adoption of domestic alternatives from companies such as Huawei Technologies and Cambricon Technologies.

The production halt raises fresh questions about demand for the H20. Shares in Chinese chipmakers rallied following the news, with Cambricon stock jumping as much as 10%. Nvidia’s own shares fell about 1.9% in Asia trading.

CEO Jensen Huang, speaking in Taiwan, said he was surprised by Beijing’s objections, stressing the H20 contains no backdoors or tracking features. He confirmed Nvidia is in talks with Washington over a possible successor to the H20, but added any decision rests with the US government.

The move comes just months after Nvidia and AMD were allowed to resume sales of lower-end AI chips to China — on the condition they hand over 15% of related revenue to the US government. Despite this, Chinese authorities have stepped up efforts to steer the market toward homegrown chips as part of a wider push for technological self-sufficiency.

Nvidia is due to report earnings next week, with investors watching closely how much impact the H20 setback and remaining unsold inventory will have on results.