China turns up scrutiny of Nvidia chips as tensions persist ahead of Trump, Xi meeting

China has increased its inspections of Nvidia’s AI chips, representing the latest development in the ongoing U.S.-China trade war. The Jensen Huang-led firm continues to be at the epicenter of the trade dispute between Washington and Beijing as its AI chips now face tightening restrictions from both sides. 

China has increased its restrictions on imports of U.S. semiconductors, including Nvidia’s artificial intelligence chips, according to a report from the Financial Times. 

Reportedly, Chinese customs authorities have dispatched officials to major ports to conduct strict inspections on semiconductor shipments. The initial focus was on Nvidia’s H20 and RTX Pro 6000D chips, but the focus has expanded to include all advanced processors that might breach Washington’s restrictions.

The availability of Nvidia’s cutting-edge AI chips has been a long-standing source of friction between Beijing and Washington. U.S. export restrictions limit the sale of high-performance processors to China due to concerns about national security and military concerns. In response, Beijing has attempted to reduce its reliance on foreign suppliers and increase domestic semiconductor production. 

Beijing intensifies restrictions on U.S. chips and semiconductor imports

Despite Beijing’s efforts, more than $1B worth of Nvidia’s high-end chips were smuggled and resold in China between May and August. Nvidia’s RTX6000D chip, which is tailored for the Chinese market to comply with American regulations, has reportedly seen a decline in interest, as major Chinese tech firms are hesitant to place large orders due to uncertainty over future restrictions.

China’s regulators have previously accused Nvidia of anti-competitive behavior and instructed domestic firms to halt purchases of its AI processors. Despite significant progress by domestic manufacturers such as Huawei, engineers in China say Nvidia’s chips still outperform domestic alternatives.

In August, President Trump hinted at easing restrictions to allow Nvidia to sell more advanced chips in China. But with Beijing intensifying inspection and tightening export controls, all those efforts might not have much of an impact.

Trade tensions ahead of Xi–Trump meeting

Beijing’s increased inspection of Nvidia’s chips comes just weeks before Xi and Trump are expected to meet on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea’s Gyeongju.

The summit follows months of tense negotiations between the two countries, which have been struggling to move beyond their current 90-day tariff truce set to expire on November 9.

Beijing has been increasing its export restrictions in order to strengthen its leverage in talks with Washington. On October 9, it added five new elements to its export control list and imposed curbs on artificial diamonds and graphite anode materials, which are both critical components in semiconductors and quantum devices. 

The measures are set to take effect on November 8, one day before the truce ends.

As the world’s largest producer of rare earth minerals, China has been tightening its grip over the supply of materials essential to global manufacturing of electronics, batteries, and defense systems. Its earlier export controls announced in April triggered temporary shortages in the U.S. and Europe before later deals helped ease the disruptions.

Both countries have traded tariffs exceeding 100% on goods ranging from agricultural products to automobiles. Chinese officials have repeatedly urged the U.S. to lift curbs that they say unfairly constrain its economy. Both countries also have geopolitical tensions as Beijing is urging Washington to adopt a firmer stance against Taiwan’s independence rather than the ambiguous position it currently holds. 

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