China Intensifies Nvidia Chip Inspections as $1B Smuggling Surfaces

- China escalates inspections of Nvidia chips as $1B smuggling surfaces. - Restrictions signal rising U.S.–China tension ahead of tariff truce expiration. On October 10, 2025, the *Financial Times* and *Reuters* reported that China has escalated its inspections of Nvidia AI chips and other advanced U.S. semiconductors. This strategic action comes just weeks before a pivotal meeting between Chinese President Xi Jinping and U.S. President Donald Trump at the Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju, South Korea. The inspections also coincide with the looming expiration of a 90-day tariff truce on November 9. This timing signals intensifying trade tensions between the two nations. Chinese customs officials have deployed to major ports to enforce more rigorous inspections of semiconductor shipments. The inspections initially targeted Nvidia's H20 and RTX Pro 6000D chips but have since expanded to include any advanced processors that might violate U.S. export restrictions. Citing national security risks, the United States has placed tight controls on the export of high-performance chips to China. These restrictions make Nvidia a focal point in the trade dispute, as its processors remain unmatched by Chinese domestic alternatives. Between May and August of this year, smugglers brought more than $1 billion worth of Nvidia’s high-end chips into China, highlighting the strong demand for these components despite U.S. sanctions. Meanwhile, China actively invests in its domestic semiconductor sector; however, industry experts acknowledge that a substantial technological gap remains. China further escalated tensions on October 9 when the government announced it would add five elements to its export control list. It also placed new restrictions on artificial diamonds and graphite anode materials, which are critical for semiconductor production and quantum devices. The new controls take effect on November 8, just one day before the tariff truce ends, amplifying their impact on global manufacturing. As the world's largest producer of rare earth minerals, China's export constraints hold significant leverage in international supply chains. China’s intensified inspections and export restrictions are strategic maneuvers, as the country aims to bolster its position in upcoming trade negotiations with the United States. These developments will considerably impact the semiconductor industry and broader U.S.-China trade relations as both sides approach a critical juncture at the APEC summit.