The letter states that allowing sales of the H20 AI chip to China could hurt the U.S.'s AI "edge" and worsen chip bottlenecks in the U.S.

Nvidia earlier this month said the U.S. government is giving permission to sell its H20 microchip again in China — but now a Chinese regulator is raising a red flag.

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.