China Circumvents US Export Restrictions on NVIDIA AI Chips
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China's Markets Still Manage To Get Nvidia AI Chips Via Smuggling: Report - NVIDIA (NASDAQ:NVDA)
Smaller Chinese cloud providers rent Nvidia servers for $6/hour, undercutting U.S. prices by 40%, showing strong AI investment in China. Nvidia Corp NVDA artificial intelligence chips are still selling in Chinese markets at discounted rates of up to 60% after entering the country via smuggling and other channels. Smaller Chinese cloud providers are renting Nvidia AI servers at $6 an hour versus the $10 an hour charged by their U.S. counterparts despite the U.S. semiconductor sanctions, the Financial Times reports. It signals that Chinese tech giants remain heavily invested in their AI ambitions despite the export controls. The discounts reflect the vast availability of the banned A100 and H100 chips, advertised for sale on Chinese social media and e-commerce sites like Alibaba Group Holding's BABA Taobao and in electronics markets at a slight premium, as per FT. The black market also highlights China's cheaper labor and resources, allowing smaller vendors to remain competitive despite illegally sourcing components. FT noted that Alibaba and ByteDance charge twice to fourfold the price of smaller local vendors due to stricter regulatory compliance. Recent reports claimed Alibaba, Tencent Holding TCEHY, and Baidu Inc BIDU spent 50 billion Chinese Yuan ($7 billion) on capital expenditures in the first half of 2024, compared to 23 billion Chinese Yuan a year ago. China earmarked 43.5 billion yuan ($6.12 billion) for computing data centers, according to the National Data Bureau. Nvidia had maintained that the semiconductor sanctions had minimal to no impact on business, while companies like Alibaba acknowledged the downsides of the export controls. Price Action: NVDA stock traded lower by 1.54% at $105.58 premarket at the last check Friday. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs
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China Offers Nvidia's AI Chips At Discounted Rents, As Low As $6 Per Hour, Despite US Export Restrictions: Report - NVIDIA (NASDAQ:NVDA)
Nvidia Corporation's NVDA high-end artificial intelligence chips are reportedly available for rent at lower rates in China than in the US, despite the existing export restrictions. What Happened: Small Chinese cloud providers are offering local tech groups access to servers equipped with eight Nvidia A100 processors for approximately $6 per hour, Financial Times reported on Friday. In comparison, similar services in the U.S. cost around $10 per hour. This pricing suggests a significant supply of Nvidia chips in China, indicating a possible bypass of U.S. restrictions aimed at limiting access to advanced technologies. Despite the ban on shipping Nvidia's most powerful AI accelerators, the A100 and H100, to China since fall 2022, these products are readily available in the country. They are openly advertised for sale on Chinese social media and ecommerce platforms, including Xiaohongshu and Alibaba's Taobao, at slightly higher prices than abroad. See Also: Cathie Wood Congratulates Elon Musk On xAI Milestone After AI Firm Brings 100K Nvidia GPU Colossus Cluster Online In Just 122 Days: 'Many Big Announcements Ahead' Nvidia has stated that it sells its processors "primarily to well-known partners . . . who work with us to ensure that all sales comply with U.S. export control rules." Why It Matters: This development follows Nvidia's reported efforts to create a new version of its flagship AI chip specifically for the Chinese market in July. The following month Nvidia's advanced AI chips were reaching the Chinese military, despite US trade restrictions. China's massive investments in chipmaking, surpassing the U.S., Taiwan, and South Korea combined in September, could be a contributing factor to the availability and affordability of Nvidia's AI chips in the country. Read Next: OpenAI Co-Founder Ilya Sutskever's AI Startup Raises $1B From Andreessen Horowitz, Sequoia As Sam Altman-Led Company Faces Exodus Image via Shutterstock This story was generated using Benzinga Neuro and edited by Pooja Rajkumari Market News and Data brought to you by Benzinga APIs
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Despite US export restrictions, China continues to access NVIDIA's AI chips through smuggling and discounted rental services, highlighting the challenges in enforcing tech export controls.
China's Access to NVIDIA AI Chips Despite US Restrictions
In a surprising turn of events, China has managed to maintain access to NVIDIA's advanced AI chips, circumventing strict US export controls. This development underscores the challenges faced by the United States in its efforts to limit China's technological advancement in the field of artificial intelligence.
Smuggling Operations Uncovered
Recent reports indicate that Chinese markets are still obtaining NVIDIA AI chips through smuggling operations 1. These illicit activities have created a shadow market for the coveted processors, allowing Chinese companies to continue their AI research and development despite the export restrictions. The persistence of these smuggling networks highlights the high demand for NVIDIA's cutting-edge technology in China's tech sector.
Discounted Rental Services Emerge
In addition to smuggling, a new trend has emerged in China's AI chip market. Some Chinese companies are now offering NVIDIA's AI chips at discounted rental rates, with prices as low as $6 per hour 2. This innovative approach allows smaller firms and researchers to access the powerful processors without the need for significant capital investment, further fueling China's AI ambitions.
Impact on US Export Control Efforts
The continued availability of NVIDIA chips in China raises questions about the effectiveness of US export restrictions. While the controls were intended to slow China's progress in AI technology, these developments suggest that determined actors can find ways to bypass such limitations. This situation presents a complex challenge for US policymakers and regulators seeking to maintain technological superiority.
NVIDIA's Position
NVIDIA, caught between US regulations and the lucrative Chinese market, finds itself in a delicate position. The company has previously expressed concerns about the potential loss of revenue due to export restrictions. The current situation, where their chips are being accessed through unofficial channels, may lead to further complications for the tech giant in navigating international trade policies.
Implications for Global AI Competition
The ongoing access to NVIDIA's AI chips in China has significant implications for the global AI race. Despite US efforts to maintain a technological edge, China's ability to obtain these crucial components suggests that the competition in AI development remains fierce. This situation may prompt both nations to reassess their strategies in the rapidly evolving field of artificial intelligence.
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