Chinese authorities have launched a
The measure, coordinated by the Cybersecurity Administration of China (CAC) along with customs services, aims to detection of smuggling and curbing illegal imports of U.S. chips into the Chinese market. What started as a selective control over the H20 and RTX 6000D has expanded within days to encompass “all advanced semiconductor products,” according to sources cited by the British newspaper.
Nvidia Under Scrutiny
The Nvidia H20 was announced late 2024 as a tailored version for the Chinese market, developed to avoid violating Washington’s trade sanctions. The chip quickly became a viable alternative for tech giants like ByteDance, Alibaba, and Tencent, eager to maintain their generative AI and model training projects despite export restrictions.
However, last month, the same customers received orders to suspend new H20 purchases, and current shipments are being detained or indefinitely blocked. Industry sources indicate that containers with these chips, valued at millions of dollars, are under inspection at ports in Shanghai, Shenzhen, and Tianjin. Nvidia, contacted by various international media outlets, declined to comment.
A Dual-Objective Control Campaign
Peking’s offensive has two sides. On one hand, preventing smuggling of U.S. chips that still manage to enter via intermediaries in Hong Kong, Singapore, or Vietnam despite sanctions. On the other, supporting domestic AI accelerator production, in line with the technological self-sufficiency strategy the government has promoted for years.
Sources close to the CAC note that inspections aim to “ensure that critical national infrastructures do not depend on unauthorized foreign hardware.” Simultaneously, Chinese officials are also reviewing technical documentation of imported chips to verify if they meet the country’s cybersecurity and data transfer standards.
A Context of Growing Tech Tensions
This action comes amid heightened tension between the United States and China over AI and semiconductor control. Following Washington’s bans on the most advanced GPUs—such as the A100 and H100—Nvidia developed a “cut-down” series for China, including models like H800 and H20, adjusted for power and bandwidth limits imposed by the U.S. Department of Commerce.
But Beijing’s patience seems to have run out. Sector analysts interpret the decision as a political and strategic response: China might be using inspections as leverage while accelerating the development of its own national GPUs, such as Birente, Moore Threads, or Huawei Ascend.
Near Future with Frictions
Although Chinese manufacturers have made significant advances in chip design, they still face severe bottlenecks: the lack of high-density HBM memory, dependence on advanced lithography equipment, and limited capacity of their foundries remain obstacles to ramping up large-scale production.
This leaves data center operators in a tricky position. On one side, shipments of H20 and RTX 6000D are halted and may never arrive. On the other, domestic chips still do not match the power and energy efficiency of Nvidia or AMD GPUs, threatening to delay AI projects and cloud services in the short term.
Global Implications
For Nvidia, the Chinese market—which accounts for between 20% and 25% of its data center chip revenue—is too large to lose. However, each new restriction, whether from Washington or Beijing, complicates their position and erodes growth margins of their flagship division.
The increased Chinese customs controls might be seen as a partial confidence signal in the country’s ability to replace foreign hardware with local alternatives, but also as a systemic risk to the global tech supply chain.
With the U.S. tightening export limits on AI technology and China sealing its ports against imported chips, the sector’s near-term outlook points to a scenario of technological fragmentation, where each economic bloc aims to build its own semiconductor ecosystem.
Summary
- China has deployed inspection teams at key ports to review all data center hardware shipments with Nvidia chips.
- The H20 and RTX 6000D models, designed to comply with U.S. export regulations, are the first affected.
- The move seeks to stop smuggling of U.S. GPUs and foster local AI chip development.
- Chinese operators are now facing delays in hardware delivery and a limited supply of domestic alternatives.
- The tech conflict between China and the U.S. enters a new phase: total control of the AI supply chain.
via: tomshardware