Story perspectives

China Cracks Down on Nvidia Chips, Boosts Local Tech

10/12/2025

Summary

China Tightens Semiconductor Controls

China expanded customs inspections to all advanced semiconductors to curb Nvidia's AI chips and boost domestic production.
Chinese authorities ordered major tech firms to halt Nvidia purchases, pushing them toward local alternatives such as Huawei.
Reports indicate over $1 billion worth of Nvidia chips were smuggled into China recently, prompting stricter enforcement.
Nvidia faces declining demand in China, while local firms stand to gain from redirected orders amid broader tensions.

Summary

Semiconductors Face Decline

On October 10, 2025, Semiconductor Manufacturing International Corporation (SMIC) fell 8.2% and Hua Hong Semiconductor Limited (Hua Hong) fell 6.6% amid valuation and margin-cut concerns.
The CSI 300 Index closed down 2% as tech losses weighed on sentiment.
Reports indicated SMIC’s margin financing ratio was cut to zero, requiring full payment for shares.
SMIC was trading at 152 times estimated forward earnings, underscoring inflated valuations and leaving little room for error.

History

Historical Context

In June 2020, the U.S. designated Huawei a national security threat, leading to export restrictions that disrupted global semiconductor supply chains. By 2021, Huawei accounted for 14% of global smartphone sales. China's response included customs inspections targeting Nvidia, reflecting ongoing tensions and a push for self-sufficiency in technology, which may further fragment the semiconductor market.

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China Tightens Semiconductor Controls

China expanded customs inspections to all advanced semiconductors to curb Nvidia's AI chips and boost domestic production.
Chinese authorities ordered major tech firms to halt Nvidia purchases, pushing them toward local alternatives such as Huawei.
Reports indicate over $1 billion worth of Nvidia chips were smuggled into China recently, prompting stricter enforcement.
Nvidia faces declining demand in China, while local firms stand to gain from redirected orders amid broader tensions.

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