China said to tighten customs checks on Nvidia AI chips

[Nvidia headquarters in Santa Clara, California, USA]
JHVEPhoto

China is stepping up enforcement of its import controls on semiconductors, including Nvidia's (NASDAQ:NVDA [https://seekingalpha.com/symbol/NVDA]) AI chips, with customs officers conducting stringent checks at all major ports, three people with knowledge of the matter told the _Financial Times_.

The inspections initially aimed to ensure that local companies don't order Nvidia's (NASDAQ:NVDA [https://seekingalpha.com/symbol/NVDA]) chips tailored for the Chinese market - H20 and RTX Pro 6000D. China's internet regulator last month directed local firms to stop buying these chips and cancel existing orders.

But customs inspections were recently extended to all advanced semiconductor products, a source told [https://www.ft.com/content/8d5387f2-62b0-4830-b0e4-00ba0622a7c8] _FT_, to better target smuggling of high-end U.S. chips.

Some customs officials are looking into whether companies made false declarations about advanced semiconductor imports in the past. At least $1B worth of Nvidia's (NASDAQ:NVDA [https://seekingalpha.com/symbol/NVDA]) top AI chips were smuggled and sold in China in the three months from May, _FT _reported in July.

The more stringent checks signal Beijing's resolve to ensure Chinese companies end their dependence on American technology. Senior officials also believe local chips have reached performance standards that compare with Nvidia's (NVDA [https://seekingalpha.com/symbol/NVDA]) China-specific chips.

Nvidia's (NVDA [https://seekingalpha.com/symbol/NVDA]) H20 chip sales totaled $4.6B in Q1, but recorded no shipments in Q2 and did not include H20 sales in its Q3 outlook. "If geopolitical issues reside, we should ship $2B-$5B in H20 revenue in Q3," CFO Colette Kress said in a recent earnings call [https://seekingalpha.com/news/4489813-nvidia-outlines-3t-4t-ai-infrastructure-opportunity-through-next-five-years-as-blackwell].

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