China has reportedly launched a sweeping customs crackdown on Nvidia Corporation's (NASDAQ:NVDA) AI chips.
Beijing Launches Nationwide AI Chip Inspection Drive
Teams of Chinese customs officers have been mobilized at major ports across the country to conduct stricter inspections of semiconductor imports, reported the Financial Times, citing three people with knowledge of the matter.
The initial focus was Nvidia's China-specific AI processors — the H20 and RTX Pro 6000D — which were designed to comply with U.S. export controls.
The checks, which began in the past few weeks, were aimed at ensuring Chinese companies stop ordering these Nvidia products following guidance from regulators discouraging their purchase.
Officials have since widened the inspections to include all advanced chips to prevent smuggling of restricted U.S. hardware.
One source told the publication that customs officials are now checking for false declarations and potential smuggling violations.
An Nvidia spokesperson declined to provide a comment to Benzinga.
See Also: Mitch McConnell Says Trump Tariffs-Ushered Era Has ‘Similarities’ With The 1930s
China Moves To Replace Nvidia With Domestic Chips
The crackdown comes after Beijing's Cyberspace Administration of China (CAC) instructed leading tech companies — including ByteDance and Alibaba Group Holding Ltd. (NYSE:BABA) — to terminate orders and testing of all Nvidia products in mid-September.
Chinese authorities are reportedly convinced that domestic semiconductor firms have reached performance levels comparable to Nvidia's downgraded China-only chips.
Beijing now plans to triple production of advanced semiconductors next year to fill the demand gap left by Nvidia's exit.
Previously, it was reported that at least $1 billion worth of Nvidia's top-tier AI chips were smuggled into China over three months from May, prompting the intensified enforcement effort.
Nvidia Downplays Impact, Says China Revenue Is Already Zero
Earlier this week, Nvidia CEO Jensen Huang told CNBC's Jim Cramer that the company's financial guidance already assumes "China zero" revenue due to ongoing export restrictions.
Huang also warned that a complete ban on U.S. chip exports could ultimately harm American firms more than their Chinese counterparts.
In August, Nvidia said it expects third-quarter revenue to fall between $52.92 billion and $55.08 billion, compared to the Street consensus of $52.96 billion. The outlook excludes any contribution from H20 shipments to China.
Price Action: Despite mounting regulatory headwinds, Nvidia remains the world's most valuable chipmaker, with a market capitalization of about $4.68 trillion. Shares have climbed more than 42% over the past year and are up 39% so far in 2025, according to Benzinga Pro.
Benzinga's Edge Stock Rankings show Nvidia scoring in the 97th percentile for Growth and 93rd for Quality, underscoring its dominance in the global AI chip race even as geopolitical risks intensify.
Read next:
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: JRdes / Shutterstock
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
