Drought is the primary limiting factor for tree growth in arid and semi-arid regions, where it can greatly influence xylem anatomical traits and induce multiple responses to wood development. However, the mechanisms driving xylogenesis and intra-annual density fluctuations (IADFs), as well as the seasonal dynamics of wood development in water-limited environments, are still unclear. In this study, we assessed the kinetics of xylem development weekly in Chinese pine (Pinus tabuliformis) and Qinghai spruce (Picea crassifolia), at two altitudes in the Helan Mountains, semi-arid China. Results indicate that summer drought in June inhibited cambial division and reduced xylogenesis, resulting in only 40% of the xylem developing before August. The onset of abundant precipitation in mid-July reactivated radial growth. This second growth extended the growing season by one month and partly compensated for the negative effect of the drought on growth. E-type IADF were characterized by narrow cells with thick walls, formed during July and early August. The duration of cell enlargement explained 57% of variance in tracheid diameter, showing that it played an important role in determining cell size. In contrast, changes in the cell wall thickness were mainly driven by the rate of secondary wall thickening, which explained 65% of the variance. This study reveals the potential mechanisms for xylem development and E-IADF formation under summer drought in semi-arid China, provides evidence for the plasticity and resistance of Chinese pine and Qinghai spruce under varying environmental conditions, and contributes to our understanding of likely future trends in forest productivity under climate changes.