Key Takeaways China has deployed customs teams at major ports to enforce strict inspections of semiconductor shipments, specifically targeting Nvidia AI chips. The crackdown follows Beijing's Septembe...
China has significantly escalated enforcement of its semiconductor import restrictions, deploying teams of customs officers at major ports across the country to conduct rigorous inspections of chip shipments, according to a Financial Times report published Friday.
The inspections, which began in recent weeks, aim to ensure Chinese technology companies comply with regulatory guidance to cease purchases of Nvidia's China-specific artificial intelligence processors.
The Financial Times cited people with knowledge of the matter, though Reuters noted it could not immediately verify the report. Neither China's customs authorities nor Nvidia responded to requests for comment.
The customs crackdown represents the latest phase in China's campaign against Nvidia, which has seen Beijing take multiple actions to curtail the American company's access to the world's second-largest economy.
In mid-September, the Cyberspace Administration of China instructed major technology firms including ByteDance and Alibaba to halt orders and testing of Nvidia products, particularly the RTX Pro 6000D chip designed specifically for the Chinese market.
The CAC's directive came as companies had indicated interest in purchasing tens of thousands of the RTX Pro 6000D units, according to the Financial Times. The chip was Nvidia's attempt to create a product that complied with U.S. export restrictions while still serving Chinese customers.
Nvidia CEO Jensen Huang addressed the situation at a press conference in London in September, stating, "We can only be in service of a market if a country wants us to be. I'm disappointed with what I see, but they have larger agendas to work out between China and the United States."
Chinese regulators have justified their actions by claiming that domestic AI chip manufacturers have achieved performance levels comparable to Nvidia's made-for-China products.
According to the Financial Times, Beijing summoned local chipmakers and concluded their capabilities now match those of American processors.
Qingyuan Lin, a senior analyst covering China semiconductors at Bernstein, told CNBC: "All these recent actions show that China has much more confidence in their domestic sector than they used to."
Evidence of progress in China's semiconductor industry has emerged in recent months.
Chinese tech giant Huawei announced new AI compute infrastructure using its in-house Ascend chips in September, while Chinese AI startup DeepSeek indicated its latest model would be compatible with the country's next-generation homegrown processors.
Major companies, including Alibaba and Baidu, have reportedly begun using internally designed chips to train AI models, partially replacing Nvidia hardware.
The crackdown occurs against a backdrop of deteriorating U.S.-China technology relations. Republican House Speaker Mike Johnson characterized China as an adversary of the United States in September, telling CNBC: "They steal our intellectual property. They have no regard whatsoever for U.S. trademark law or any of the other provisions that make for fair trade agreements."
Analysts suggest Beijing may be using market access as leverage in broader trade negotiations with Washington.
In August, the Trump administration agreed to allow Nvidia and AMD to sell certain chips in China in exchange for the companies paying 15% of revenues to the U.S. government, according to the Financial Times.
However, as of Nvidia's most recent earnings report, the company had not yet sold any units to Chinese customers under this arrangement.
China has also launched an antitrust investigation into Nvidia, with regulators announcing in September that a preliminary probe found the company violated anti-monopoly law related to its 2020 acquisition of Israeli equipment maker Mellanox Technologies.
The combined regulatory pressure has significant implications for Nvidia's business.
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