Nvidia AI chips targeted in China customs crackdown- FT

Investing.com-- NVIDIA Corporation’s (NASDAQ:NVDA) artificial intelligence chips were subject to increased scrutiny from China’s customs authorities in recent weeks, the Financial Times reported on Friday, as Beijing seeks to further wean local developers off U.S.-made processors. 

Teams of customs officers were mobilized at major ports across the country in recent weeks to carry out stringent checks on semiconductor shipments, the FT reported, citing three people with knowledge of the matter.

The inspections are aimed at ensuring local companies do not order Nvidia’s China-specific chips– mainly the H20 and the RTX Pro 6000D– following heightened opposition towards the products by Chinese regulators. 

But the FT report said the checks were extended to cover all advanced chip imports, to also better target the smuggling in of goods that breach U.S. export controls. 

Nvidia’s China-specific chips are made in line with U.S. restrictions on AI chip sales to China. But Beijing balked at these restrictions and had begun encouraging developers to use Chinese chips instead, calling the issue a matter of national security. 

While Nvidia was authorized to resume selling chips to China earlier this year, the company has found limited demand, at least on official fronts. 

Beijing was also seen ramping up investment in local chipmakers, with developers such as Huawei, Cambricon Technologies, and Semiconductor Manufacturing International Corp (HK:0981) seen at the forefront of this push.

Reports earlier this year suggested that Beijing’s new aversion to U.S. chips was motivated by seemingly insulting remarks from U.S. commerce secretary Howard Lutnick on chip sales to China. 

But this has left Nvidia walking a tightrope between U.S. export restrictions and Chinese regulatory aversion. China still represents a major market for the chipmaker.