Nvidia AI Chips Worth $1B Smuggled to China Despite US Export Controls

Nvidia AI chips worth $1B smuggled to China after Trump export controls

At least $1 billion worth of Nvidia's advanced artificial intelligence processors were shipped to China in the three months after Donald Trump tightened chip export controls, exposing the limits of Washington's efforts to restrain Beijing's high-tech ambitions. A Financial Times analysis of dozens of sales contracts, company filings, and multiple people with direct knowledge of the deals reveals that Nvidia's B200 has become the most sought-after -- and widely available -- chip in a rampant Chinese black market for American semiconductors. The processor is widely used by US powerhouses such as OpenAI, Google, and Meta to train their latest AI systems, but banned for sale to China. In May, multiple Chinese distributors started selling B200s to suppliers of data centers that serve Chinese AI groups, according to documents reviewed by the FT. This was shortly after the Trump administration moved to prevent sales of the H20 -- a less-powerful Nvidia chip tailored to comply with Joe Biden-era curbs. It is legal to receive and sell restricted Nvidia chips in China, as long as relevant border tariffs are paid, according to lawyers familiar with the rules. Entities selling and sending them to China would be violating US regulations, however. Last week, Nvidia chief Jensen Huang announced that the Trump administration would begin to allow the selling of its China-specific H20 chip once more. In the three months beforehand, Chinese distributors from Guangdong, Zhejiang, and Anhui provinces sold Nvidia's B200s, as well as other restricted processors such as the H100 and H200. According to contracts reviewed by the FT and people with knowledge of the transactions, the total sales during this period are estimated to be more than $1 billion. Nvidia has long insisted there is "no evidence of any AI chip diversion". There is no evidence that the company is involved in, or has knowledge of, its restricted products being sold to China. "Trying to cobble together data centers from smuggled products is a losing proposition, both technically and economically," Nvidia told the FT. "Data centers require service and support, which we provide only to authorized Nvidia products." "The new century of a smart China" One Anhui-based company, whose name translates to "Gate of the Era," is one of the largest sellers of B200s, according to documents seen by the FT. It was founded in February, as speculation mounted that Trump would stop H20 chip sales to China. The company is fully owned by a group with the same name based in Shanghai, registered on the same day, according to company filings. The chips were sold in ready-built racks, each containing eight B200s as well as other components and software needed to plug straight into a data centre. Such a rack is about the size of a large suitcase and weighs close to 150 kg including packaging. The current market price ranges between RMB 3 million to RMB 3.5 million ($489,000) per rack, down from more than RMB 4 million in mid-May when they first became available in China in large quantities. The current prices represent about a 50 percent premium from the average selling price of similar products in the US. Since mid-May, Gate of the Era obtained at least two shipments of a few hundred B200 racks each, according to people with knowledge of the deals. They sold them directly -- or indirectly via secondary distributors -- to various data centre suppliers and other companies. Gate of the Era and its affiliates are estimated to have sold close to $400mn of such products. Gate of the Era lists an AI solution provider China Century -- or Huajiyuan in Chinese -- as its largest shareholder, according to company registration files. Also headquartered in Shanghai, China Century states on its website it has a lab in Silicon Valley as well as a supply chain centre in Singapore, with the company saying it uses data tools to build "the new century of a smart China." China Century claims to have more than 100 business partners and highlights AliCloud, ByteDance's Huoshan Cloud, as well as Baidu Cloud as "trusted partners" on its website. AliCloud and Baidu did not respond to requests for comment. Huoshan Cloud's name was taken off China Century's website after the FT approached them for comment. Huoshan Cloud said: "It is standard practice for any company to manage the unauthorized use of its logo. "We have not procured Nvidia's chips. We do not have any related [Nvidia chip] business," said China Century, adding that it did "smart city work," The FT visited the registered headquarters of Gate of the Era at an office in a government-run industrial park dedicated to cryptography companies. No representative was available. The company had not yet moved into the office since changing its registration to the address in June. The FT also visited its previous registered address, which was occupied by a real estate investment group that had been there for more than two years and claimed no connection. When reached on the phone, Gate of the Era declined to comment. According to industry insiders, product specifications and pictures of packaging seen by the FT, many of the B200 racks sold by Gate of the Era, as well as other Chinese distributors, over the past months were originally from Supermicro, a US-based assembler that provides chip solutions to data centers. There is no suggestion that Supermicro is involved in or has knowledge of its products being smuggled into China. Supermicro said it "complies with all US export control requirements on the sale and export of GPU systems." "Export controls will not prevent the most advanced Nvidia products from entering China," said one Chinese data centre operator. "What it creates is just inefficiency and huge profits for the risk-taking middlemen." "It's like a seafood market" Some Chinese distributors openly market products such as Supermicro's B200 racks on social media that show photos of packages with the company's logo -- although it has not been verified if the sales have been completed. To showcase the "plug-and-use" nature of such racks, some vendors provide testing for buyers, according to those with knowledge of the practice and clips posted online. Transactions tend to happen on the spot, with buyers picking up the products after checking their legitimacy. On social media, groups are created to match supply and demand from hundreds of traders and data centre suppliers. Apart from B200, various other restricted Nvidia chips such as H200, H100, and 5090 are being advertised openly on Chinese social media platforms such as Douyin and Xiaohongshu. Packaging and installation pictures and videos seen by the FT show product logos of companies such as Supermicro, Dell, and Asus -- infrastructure providers that assemble Nvidia's chips into servers. There is no suggestion that these companies are aware of the social media advertising or their products being sold in China. Like Supermicro, Dell, and Asus said they maintained rigorous and strict compliance to all laws and regulations, including US export controls, and took action against partners who failed to comply. "It's like a seafood market," said one distributor, "There's no shortage." Racks for sale -- with more smuggled stock to come The B200 is in high demand given its performance, value, and relatively easy maintenance compared with the more complex Grace Blackwell series, according to industry insiders. The GB200 AI rack, containing Nvidia's most high-end products, also appear to be available in China despite US export controls. One distributor claimed it had sold 10 racks of GB200 at close to RMB 40 million ($5.6 million) each. The FT could not independently verify this claim, while marketing information about GB200 from various distributors' accounts on social media shows consistent pricing and stock status as "available for pick up onshore." Some Chinese distributors have even started advertising for their future stock of B300s, Nvidia's upgrade from the B200 expected to enter mass production in the fourth quarter of this year. US export controls have had some effect on the black market. Given the nature of such products, leading Chinese AI players with global operations are not able to order them in a legally compliant way, install them in their own data centers, or receive Nvidia's customer support. This has led to third-party data centre operators becoming key buyers who then provide computing services. Other clients include smaller companies in tech, finance, and health care that do not have strong compliance requirements, as well as Chinese companies on the so-called US entity list that are not allowed to buy any Nvidia chips legally. However, the scale of these projects is much smaller compared with mega clusters of data centers being built by tech giants around the world. With H20 export controls having been lifted, many Chinese tech companies are expected to resume purchasing the compliant chips in large sums even though its performance is generations behind the still restricted products such as B200, according to people familiar with their plans. Black market sales for B200s and other restricted Nvidia chips dropped noticeably after the relaxation of the H20 ban, according to multiple distributors. "People are weighing their options now H20 is available again," said one distributor. "But there will always be demand for the most cutting-edge stuff." The Southeast Asia stop off Industry experts said that Southeast Asian countries have become markets where Chinese groups obtained restricted chips. The US Department of Commerce is discussing adding more export controls on advanced AI products to countries such as Thailand as soon as September, according to two people familiar with the matter. This rule is mainly targeting Chinese intermediaries used to obtain advanced AI chips via these countries. The US commerce department declined to comment. The Thai government did not respond to a request for comment. Earlier this month, Malaysia introduced stricter export controls targeting advanced AI chip shipments from the country to other destinations, especially China. The potential tightening of export controls on Southeast Asian countries has also contributed to buyers rushing to place orders before such rules take effect, according to people with knowledge of the matter. Even if these avenues to obtain AI chips are closed, Chinese industry insiders said new shipping routes would be established. Supplies have already started arriving via European countries not on the restricted list. "History has proven many times before that given the huge profit, arbitrators will always find a way," said one Chinese distributor. Additional reporting by Michael Acton, Demetri Sevastopulo, and Anantha Lakshmi.

$1 billion in Nvidia chips found their way to China: FT

An estimated $1 billion worth of smuggled high-end Nvidia AI processors have reportedly found their way onto the Chinese black market, despite the US government's strict restrictions on exports of the tech. The eyebrow-raising figure, which Nvidia has neither confirmed nor refuted, was revealed by the Financial Times, which claims to have based its reporting on a combination of interviews and analyses of company filings and sales contracts. If accurate, the report sheds light on the limitations of the US trade policy's ability to control the movement of much sought-after AI technology around the world. The specific chips cited are Nvidia's B200 series, part of the Blackwell architecture that debuted last year. According to the FT's report, the units sold through China's black market are distributed as ready-made racks containing multiple processors each, which can be installed into datacenters without significant hardware integration. Software needed to fire up the racks is reportedly included in the bargain. These same chips are used by virtually all US AI powerhouses, including Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and others. However, exports of advanced Nvidia chips to China have been sharply restricted by US trade policy. That doesn't seem to have stopped the chips from making their way into the Middle Kingdom through less scrupulous distributors, often rumored to include those in nearby countries such as Malaysia and Thailand. This sort of semiconductor skullduggery is nothing new for China, where an underground market for Western-designed semiconductors has long thrived. China's capacity for chip fabrication has lagged behind its economic competitors. Foremost among these is Taiwan, China's contentious neighbor and home to fab giant TSMC, which manufactures most of Nvidia's chips. Occasionally, rumors of a new, competitive, Chinese-produced microprocessor emerge, only for the shipping product to be revealed as little more than a bootlegged version of an earlier-generation chip by a Silicon Valley firm such as Intel or AMD. In response, US lawmakers have increasingly tightened trade regulations on semiconductor technology sales to China, particularly where it comes to AI chips. The loudest voices have come from the so-called China hawks in Congress, who view the Asian nation as the US' leading opponent in a trade war in which technology is a key issue. Feeding this hostility are China's claims that it can achieve greater progress in AI research than US firms and with less. The researchers behind DeepSeek, the Chinese large language model (LLM) announced earlier this year, claim it can achieve results equivalent to those of the best models designed by US AI titans, but with far less investment. For a time, the Trump administration's ban on exports of AI chips to China was universal. As of April, Nvidia could not sell AI chips to China. Earlier this month, however, the administration lifted the ban, but only for comparatively underpowered chips such as the H20. Even this backpedal was met with disapproval from some quarters of government. Despite all this back-and-forth over which chips may be sold to China, the availability of processors from Nvidia and other suppliers on the Chinese black market has not abated. According to the FT report, the B200 series were not the only Nvidia AI chips available for sale through illicit means. Other models that seemingly "fell off the truck" include the H200, H100, and 5090. This is not a great look for Nvidia. The Silicon Valley-based chipmaker's big bet on AI processors has paid off handsomely, making it the first company in history to achieve a $4 trillion valuation. But accurate? The circulation of restricted Nvidia chips in China, even without the company's involvement, could still draw scrutiny from US lawmakers. For its part, Nvidia stopped short of outright denying the claims of black market sales of its chip. However, in a statement to the FT, it dismissed the idea of what it described as "cobbled together" datacenters made from "smuggled products." "Datacenters require service and support, which we provide only to authorized Nvidia products," a company spokesperson said. The Chinese distributors selling the illicit merchandise, on the other hand, claim the prebuilt rack-mount processor units are virtually plug-and-play. The products are typically advertised on social media sites, and some vendors even advertise testing to ensure their customers are getting what they pay for. That's only fair, because they pay a pretty penny. Chinese buyers of the illicit merchandise typically pay a 50 percent surcharge over what a legitimate customer in another region might spend. Meanwhile, Jensen Huang, Taiwan-born co-founder and CEO of Nvidia, sees China as a significant opportunity for the company, both in terms of market and as a substantial source of talent. His negotiations with President Trump are thought to be a significant factor in the administration's choice to lift the blanket ban on Nvidia chip exports. Other US companies are less bullish on Chinese partnerships. AWS recently closed its AI lab in China, citing staff reduction and other "business decisions." It's unclear whether the Trump administration's continued escalation of its trade war with China played into this move, but there's little doubt that the chilly relations between the two global powers are unlikely to warm up soon. ®

Nvidia AI chips worth $1 billion entered China despite US curbs, FT reports

July 24 (Reuters) - Nvidia's (NVDA.O), opens new tab advanced artificial intelligence chips worth at least $1 billion were smuggled to China in the three months after Washington tightened chip export controls, the Financial Times reported on Thursday. The AI chip designer's high-end B200 processors, banned for sale in China, is widely available on a thriving Chinese black market for U.S. chips, the report said, citing sales contracts, company filings and multiple people with direct knowledge of the deals. Nvidia told Reuters that building data centers with smuggled products is inefficient both technically and financially, as the company only offers service and support for authorized products. The U.S. Department of Commerce, White House and Thai government did not immediately respond to requests for comment. Reuters could not independently verify the FT report. In May, multiple Chinese distributors started selling B200s to suppliers of data centers that serve Chinese AI groups, according to the report. The U.S. and China are battling for global dominance in AI and other cutting-edge technologies, triggering a tightrope walk for companies such as Nvidia between the world's two largest economies. Nvidia last week said it would be allowed to resume sales to China after the Trump administration reversed an export restriction on the sales of chips such as H20. The curbs were imposed in April. In the three months before that, Chinese distributors from Guangdong, Zhejiang and Anhui provinces sold Nvidia's B200s, as well as other restricted processors such as the H100 and H200, according to the report. Southeast Asian countries have become markets where Chinese groups obtained restricted chips, the report said, citing industry experts. The U.S. Commerce Department is discussing adding more export controls on advanced AI products to countries such as Thailand as soon as September, the report said. Reporting by Jaspreet Singh in Bengaluru; Editing by Arun Koyyur Our Standards: The Thomson Reuters Trust Principles., opens new tab

Nvidia AI chips: repair demand booms in China for banned products

BEIJING/SHANGHAI, July 25 (Reuters) - Demand in China has begun surging for a business that, in theory, shouldn't exist: the repair of advanced Nvidia (NVDA.O), opens new tab artificial intelligence chipsets that the U.S. has banned the export of to its trade and tech rival. Around a dozen boutique companies now offer repair services, according to two such firms in the tech hub of Shenzhen which say they predominantly fix Nvidia's H100 graphics processing units (GPUs) that have somehow made their way to the country, as well as A100 GPUs and a range of other chips. Even before it was launched, the H100 was banned from sale in China in September 2022 by U.S. authorities keen to rein in Chinese technological development, particularly advances that its military could use. Its predecessor, the A100, was also banned at the same time after being on the market for over two years. "There is really significant repair demand," said a co-owner of a firm that has been fixing Nvidia's gaming GPUs for 15 years and began working on AI chips in late 2024. Business has been so good that the owners created a new company to handle those orders, which now repairs up to 500 Nvidia AI chips per month. Its facilities, as shown in social media advertising, include a room which can accommodate 256 servers, simulating customers' data centre environments to conduct testing and validate repairs. The rapid growth of the repair industry from late last year supports the view that there has been a significant amount of smuggling of Nvidia chipsets into China. Tenders have shown that the government and the military have made purchases of the U.S. firm's banned AI chips. Concern about large-scale smuggling of high-end Nvidia products into China has prompted both Republican and Democratic lawmakers to introduce bills that would require the tracking of chipsets so that their location can be verified after they are sold. U.S. President Donald Trump's administration also backed the idea this week. The thriving repair industry also highlights how Nvidia's advanced GPUs remain in high demand despite new, albeit less powerful, products from Chinese tech giant Huawei (HWT.UL). Though the buying, selling and repair of Nvidia GPUs is not illegal in China, sources for this article were reluctant to draw scrutiny from U.S. or Chinese authorities and declined to be identified. Nvidia cannot legally provide repair or replacement items for restricted products in China. In contrast, sources said if an Nvidia GPU in another nation has a defect and is under warranty, which is normally three years, the company usually replaces it. An Nvidia spokesperson said only the company and authorised partners "are able to provide the service and support that customers need. Using restricted products without approved hardware, software, and technical support is a nonstarter, both technically and economically." REPAIR DEMAND MAY NOT FADE Nvidia has only just been allowed to recommence sales of its H20 AI chipset, which has been specifically developed for China to comply with U.S. restrictions. Switching over to H20 chipsets is, however, not necessarily a simple or good option for Chinese entities. Price is an issue as one H20 server with eight GPUs inside will likely cost more than 1 million yuan ($139,400), industry sources say. H20 chipsets, which have increased memory bandwidth, have been specifically designed for AI inference work, but firms involved in the training of large language models would likely prefer H100 chipsets which are better suited to that task. Industry sources said some of the H100 and A100 GPUs in China have been crunching data around the clock for years now, leading to an increase in failure rates. Depending on how frequently a GPU is used and how often it is maintained, an Nvidia GPU generally lasts two to five years before needing to be repaired, they said. According to the first source, his company charges between 10,000 yuan and 20,000 yuan ($1,400 to $2,800) to fix a GPU depending on the complexity of the problem. The second Shenzhen-based repair service provider - which shifted from GPU rentals to repairs this year - says it can repair up to 200 Nvidia AI chips each month, charging about 10% of the GPUs' original selling price per repair. Services generally include software testing, fan repair, printed circuit board and GPU memory fault diagnostics and repair, as well as the replacement of broken parts. In the meantime, smuggling of high-end Nvidia chips continues. Traders of chips in China say customer demand is pivoting to top-of-the-line B200 chips which Nvidia began shipping to other countries in larger quantities this year. A server with eight B200 GPUs costs more than 3 million yuan in China, they said. ($1 = 7.1724 Chinese yuan) Reporting by Che Pan in Beijing and Casey Hall in Shanghai; Additional reporting by Stephen Nellis in San Francisco; Editing by Anne Marie Roantree and Edwina Gibbs Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * China Casey Hall Thomson Reuters Casey has reported on China's consumer culture from her base in Shanghai for more than a decade, covering what Chinese consumers are buying, and the broader social and economic trends driving those consumption trends. The Australian-born journalist has lived in China since 2007.

Nvidia addresses AI chip smuggling, says bootleg datacenters are a 'losing proposition'

The statement came in response to a Financial Times report that at least $1 billion worth of its artificial intelligence chips illegally entered China. "Trying to cobble together datacenters from smuggled products is a losing proposition, both technically and economically," a spokesperson said in a statement to CNBC. "Datacenters require service and support, which we provide only to authorized NVIDIA products." According to the FT report, at least $1 billion worth of the company's chips entered China as President Donald Trump rolled out restrictions on shipments of the company's H20 chips to the world's second-largest economy. Nvidia's B200 chips, which are prohibited from being sold to China, have become popular on the black market despite restrictions, the Financial Times reported, citing sales contracts, company filings and people familiar with the deals.

$1 billion of NVIDIA AI chips were reportedly sold in China despite US bans

Financial Times details a thriving black market amid tight export controls. that $1 billion worth of NVIDIA AI chips were smuggled into China in the three months after the Trump administration . Citing sales contracts, company documents and people with direct knowledge, the publication says that a thriving black market arose for American semiconductors. Products sold included NVIDIA's top‑tier B200 chips, which have become the for American big tech when training AI models. Sale of these chips to China is banned by the United States. With journalists on the ground in China, Financial Times reports on a veritable web of third‑party data center operators, middlemen and purportedly smuggled ready‑built racks that have all materialized to meet the demand for NVIDIA's most powerful chips. Along with the B200, the H100 and H200 are also restricted yet highly sought after. All of these are far more capable than the weaker H20 chip, which was with export restrictions for sale to China, though even that model has faced and export bans. NVIDIA, for its part, told Financial Times it has "no evidence of any AI chip diversion" and that "trying to cobble together data centers from smuggled products is a losing proposition, both technically and economically." NVIDIA explained, "Data centers require service and support, which we provide only to authorized NVIDIA products." Images produced by Financial Times show boxes of server racks emblazoned with company logos such as Supermicro and ASUS being advertised on social media in China. Those companies deny any knowledge of how their products ended up on the Chinese black market, and Financial Times is not alleging any such involvement. Reporting suggests that some Southeast Asian countries have become hubs for Chinese groups to obtain restricted chips. Having these server racks shipped to Thailand or Malaysia may circumvent US export controls. The US Department of Commerce is increasing export controls on advanced AI chips to these countries. The demand for these products is without question, and as one Chinese distributor told Financial Times, "History has proven many times before that given the huge profit, arbitrators will always find a way."

China sees surge in Nvidia AI chip repair businesses despite export bans

In brief: There's a strange situation occurring in China: despite Nvidia's high-end AI chips being restricted from export to the country, businesses that repair these GPUs are experiencing a boom in demand. One company now handles up to 500 AI chip repairs every month. The US has restricted the export of Nvidia's most powerful AI chips to China since 2022 over fears that they could be used for military purposes. Although these chips aren't officially available in the Asian nation, a booming repair business has emerged. Reuters reports that one firm in the country, which began fixing gaming GPUs 15 years ago and started including AI chips in 2024, created a new company to handle all accelerator-related customer repairs, which now account for 500 repairs per month. The company has been advertising its extensive facilities on social media. It even boasts a room that can pack 256 servers to simulate customers' data center environments. It's a lucrative business, with the firm charging between 10,000 yuan and 20,000 yuan ($1,400 to $2,800) to fix one of these GPUs depending on the complexity of the repair. The report highlights how another Shenzhen-based firm decided to pivot its business from GPU rentals to repairs this year. It can handle 200 Nvidia AI chip repairs each month, charging around 10% of the GPUs' original selling price per repair. The H100 goes for between $45,000 and $53,000, and the A100 between $20,000 and $30,000 on black market sites in China. Washington first forced Nvidia to pull its A100 and H100 AI accelerators from the Chinese market in September 2022. Successive clampdowns have widened the blacklist to cover the China-specific A800 and H800, the L40/L40S, and even the RTX 4090 under an October 2023 rule. In April 2025, the new Hopper H200 and Blackwell parts - including the B100 and B200 - along with any servers or racks built around them were also restricted. Nvidia did have something to celebrate this week when it was given permission to resume sales of its H20 data center GPUs in China. The company was forced to stop sales the chip, which is designed to stay below the US performance-density threshold, in April -- a pause that cost Nvidia a $5.5 billion write-off. Commerce Secretary Howard Lutnick said the ban was reversed because the H20 is no longer Nvidia's fastest product. Many of these chips are smuggled into China, leading to US politicians recently calling for an effective method to track the GPUs. We've also seen stories about resellers in other countries selling servers to Chinese firms that are filled with Nvidia AI GPUs.

Smuggled NVIDIA chips flood China despite US export crackdown

Jensen Huang, CEO of NVIDIA, speaks to journalists during a trip to China. Despite U.S. efforts to block access to cutting-edge AI chips, Chinese companies continue to acquire them through underground channels. A Financial Times investigation has found that over $1 billion worth of NVIDIA B200s and other restricted chips have made their way into China since the U.S. introduced tighter export controls in April 2025. President Donald Trump's administration had banned the export of China-specific H20 chips from NVIDIA and similar products from AMD, citing national security concerns. But the restrictions appear to have backfired, igniting a thriving black market for NVIDIA's more powerful B200 processors.

$1 billion worth of Nvidia AI chips smuggled into China

At least $1 billion worth of Nvidia's restricted AI chips were smuggled into China after the Trump administration further constricted chip exports, according to a report. Chinese distributors began selling Nvidia's restricted B200 chip to data centers for Chinese AI groups in May, per documents reviewed by the Financial Times. Based on document analysis and sources familiar with the deals, the outlet found that Nvidia's B200 chip is the most "sought-after" and "widely available" chip on China's black market for American chips. There was "no evidence" that Nvidia had taken part in the sale of smuggled chips, FT noted. "Trying to cobble together data centres from smuggled products is a losing proposition, both technically and economically," Nvidia told the FT. "Data centres require service and support, which we provide only to authorised Nvidia products." A company based in Anhui was found to be one of the biggest sellers of Nvidia's B200, reportedly including the restricted chips in "ready-built racks" -- for $489,000 per rack -- to be immediately used at data centers with nearly $400 million worth of racks were sold since mid-May by the business and its affiliates. While those B200 racks were discovered to be originally from an American assembler, Supermicro, the FT also didn't find any evidence that the company was involved in any smuggling of its products in China. Nvidia said in a blog post on July 14 that the Trump administration would allow the chip producer to continue selling its H20 AI chips to China after the Commerce Department had blocked sales in April. The H20 was supposed to be Nvidia's big workaround for restrictions on sales of powerful AI hardware to China. When the U.S.tightened export rules last year, Nvidia responded by launching this lower-spec version of its flagship GPU designed to fall just under those limits. Shortly after the U.S. lifted restrictions on Nvidia's H20, CEO Jensen Huang started pushing for permission to sell more advanced processors to the world's second-largest economy. While Washington debates easing restrictions on chip exports to China, its black market is thriving, making policy discussion largely academic. Research from the Center for a New American Security (CNAS) estimates that between 10,000 and several hundred thousand banned Nvidia chips may have been smuggled to China in 2024 alone. Chinese firms are already planning to install more than 115,000 restricted Nvidia AI chips in some three dozen data centers across the country's western deserts -- chips they cannot legally purchase without U.S. government licenses that haven't been granted. The smuggling operation appears sophisticated and widespread. One smuggler reportedly handled an order worth $120 million for servers containing 2,400 banned Nvidia H100s destined for China, according to The Information. Chinese businessmen have openly bragged online about obtaining hundreds of restricted H200 GPUs, while authorities in Singapore arrested three people suspected of diverting AI servers worth $390 million. Huang has consistently maintained there's "no evidence of any AI chip diversion," arguing that the massive servers are "nearly two tons" and easy to track. But Commerce Under Secretary Jeffrey Kessler directly contradicted those claims. "It's happening," he told lawmakers earlier this year. "It's a fact." The smuggling networks have become increasingly sophisticated. As of this month, more than 70 distributors were openly marketing restricted processors, with many offering delivery within weeks. The chips flow through a complex web of shell companies, third-party resellers, and intermediaries across Southeast Asia. Malaysia has emerged as a particular concern, with the country's imports of advanced GPUs surging over 3,400% in early 2025, prompting new permit requirements for AI chip exports. Malaysian authorities have said they "will not tolerate the misuse of Malaysia's jurisdiction for illicit trading activities." Smugglers have used creative methods to move the hardware, including hiding chips in shipments labeled as tea or toys, and even packing them alongside live lobsters. Despite the logistical challenges, the evidence suggests the networks are moving substantial quantities of hardware across borders.

Nvidia's flagship chips pour into China via gray channels: US$1B smuggled in 3 months

Despite stricter AI chip export controls under the Trump administration, over US$1 billion worth of Nvidia's high-end GPUs have reportedly entered China through black-market channels in just three months, raising doubts about the efficacy of US trade restrictions. Citing the Financial Times, reports from Reuters, CNBC, The Register, and Tom's Hardware say Nvidia's B200 chips, officially restricted from export to China, are now widely circulating in the country. Since May, local vendors have been openly promoting the GPUs on TikTok and RedNote, offering testing services and after-sales support. The chips are typically sold as turnkey server racks, preloaded with software and multiple processors, and marketed to data center vendors serving China's AI sector. Each rack, containing eight B200 GPUs, is priced between CNY3 million and 3.5 million (approx. US$420,000 to US$490,000), a 50% markup over standard pricing. A distributor named Gate of the Era is reportedly responsible for selling several hundred of these server systems, with total sales nearing US$400 million. Although the US has eased some restrictions on Nvidia's lower-tier H20 chips, demand in China for premium models such as the B200, H100, and H200 remains robust. Third-party rerouting via Southeast Asia The chips are typically shipped from the US and passed through several intermediaries in Southeast Asia, especially Malaysia and Thailand, before entering China. While Chinese regulations allow for legal import with customs clearance and taxes, the grey zones in logistics have fueled a thriving black-market supply chain. An Nvidia spokesperson said building data centers with unauthorized chips is both technically and financially illegal, and confirmed the company only supports officially licensed products. The statement, however, did not directly address the scale of the black-market activity. Nvidia CEO Jensen Huang has stated there is no concrete evidence of AI chip resales and has criticized the broadening of US export restrictions, arguing that such measures only accelerate China's drive for homegrown semiconductor development. Startups like DeepSeek promote low-cost AI training alternatives, but most Chinese-developed chips are still seen as replicas of older US GPUs and have yet to match the performance of Nvidia's top-tier offerings. Amid growing smuggling concerns, the US Department of Commerce is considering tougher export enforcement starting in September 2025. Nations like Thailand may face new compliance rules requiring a tighter supply chain and transshipment tracking. Singapore has already arrested three individuals suspected of chip smuggling. Analysts caution that despite US efforts to slow China's AI progress, high profit margins and strong demand continue to sustain an active black market. The situation undercuts US policy goals and adds pressure to Nvidia's global political and commercial balancing act. As US-China tensions intensify, tech companies are splitting paths. Nvidia remains engaged in policy negotiations to preserve access to China, while others, like Amazon and Microsoft, are steadily scaling back. With geopolitical and commercial interests intertwined, the AI chip war is far from over.

$1 Billion Worth of NVIDIA GPUs Smuggled to China after Trump Export Controls: Report | AIM

NVIDIA's Blackwell B200 GPU was widely made available in Chinese markets. At least $1 billion worth of NVIDIA GPUs were smuggled to China, according to a report by The Financial Times (FT) on July 24. The development occurred after US President Donald Trump took office and tightened the country's export controls. FT's analysis of sales contracts, company filings, and insights from individuals familiar with the deals showed that the company's B200 systems were the most in-demand and commonly accessible chip in China's 'black market'. NVIDIA's B200 is a GPU based on the company's high-end Blackwell architecture. These chips are widely used across various hardware systems by AI companies such as OpenAI, Google, Meta, Microsoft, and others. The direct sales of this chip are prohibited in China, as the US government has placed harsh restrictions on companies exporting advanced AI hardware. The report revealed that a company in China claimed to have more than 100 business partners, including AliCloud, ByteDance's Huoshan Cloud, and Baidu Cloud. Additionally, the report also revealed that most of the B200 racks sold by a Chinese company originated from Supermicro, a US-based company. "Packaging and installation pictures and videos seen by the FT show product logos of companies such as Supermicro, Dell and Asus," read the report. All of these companies are hardware infrastructure providers with NVIDIA chips embedded in their servers. Besides, Hopper GPUs, a generation of chips preceding the Blackwell architecture, were sold in these markets. Due to various administrative restrictions, NVIDIA was barred from selling its high-performance Hopper generation GPUs, such as the H100, H200, and H20 systems. Recently, the company announced that the Trump administration has approved the sale of the H20 chip again. Note that the company developed this version to comply with Biden-era regulations by modifying certain system specifications, which were previously deemed too powerful for export to China. Read More: The Wild Ways China Smuggles NVIDIA Chips These developments have taken place despite various measures implemented by government administrations to curb illegal exports to China through South Asian countries.

NVIDIA GB200 AI servers smuggled into China, despite their two-ton weight

TL;DR: Over $1 billion worth of NVIDIA AI hardware, including GB200 AI servers and H100 GPUs, has been smuggled into China despite US export bans. Chinese black markets and distributors use trade loopholes and grey channels to supply high-end NVIDIA AI systems, highlighting challenges in enforcing chip export controls. NVIDIA AI hardware worth over $1 billion has been smuggled into China, even the huge GB200 AI servers that weigh up to two tons, in the middle of a chip ban. NVIDIA GB200 AI servers and AI GPUs are always available on Chinese black markets, with a new report from the Financial Times claiming that over $1 billion of AI hardware has ended up on China's AI black markets since the US government imposed strict export controls, including NVIDIA GB200 AI servers. The Financial Times has had eyes-on with multiple sales contracts and filings, revealing that China's AI black markets are most interested in the NVIDIA GB200 AI servers, and that they're available in local markets. The US government banned the H20 AI GPU and quickly after the H20 banned, distributors were still getting their hands on them through multiple means: trade loopholes or grey channels that haven't been fixed by the US government. The outlet reports that several Chinese provinces have a significant inventory of NVIDIA AI chips ready, including the B200, H100, and H200 AI GPUs. Chinese companies are reportedly accessing NVIDIA AI GPUs through distributors that have centers in regions like Singapore, where these AI systems are labelled under Supermicro (SMI) packaging. AI systems are available on various Chinese retail platforms, with many of these sellers even running and showing live tests of the AI racks to show the systems are legitimate. With China having high-end AI compute being sold easily on multiple platforms, it shows US export controls haven't stopped the high-end NVIDIA AI hardware from entering the country. The biggest takeaway here is the rumor that Chinese customers are getting their hands on NVIDIA GB200 AI systems, which are not only the most sought-after AI platforms on the planet, but weigh two tons. The Financial Times wouldn't verify GB200 AI servers on Chinese markets, but many vendors are publicly confirming that Grace Blackwell AI systems are available.

Nvidia AI Chips Worth $1 Billion Entered China Despite US Curbs, FT Reports

(Reuters) -Nvidia's advanced artificial intelligence chips worth at least $1 billion were smuggled to China in the three months after Washington tightened chip export controls, the Financial Times reported on Thursday. The AI chip designer's high-end B200 processors, banned for sale in China, is widely available on a thriving Chinese black market for U.S. chips, the report said, citing sales contracts, company filings and multiple people with direct knowledge of the deals. Nvidia told Reuters that building data centers with smuggled products is inefficient both technically and financially, as the company only offers service and support for authorized products. The U.S. Department of Commerce, White House and Thai government did not immediately respond to requests for comment. Reuters could not independently verify the FT report. In May, multiple Chinese distributors started selling B200s to suppliers of data centers that serve Chinese AI groups, according to the report. The U.S. and China are battling for global dominance in AI and other cutting-edge technologies, triggering a tightrope walk for companies such as Nvidia between the world's two largest economies. Nvidia last week said it would be allowed to resume sales to China after the Trump administration reversed an export restriction on the sales of chips such as H20. The curbs were imposed in April. In the three months before that, Chinese distributors from Guangdong, Zhejiang and Anhui provinces sold Nvidia's B200s, as well as other restricted processors such as the H100 and H200, according to the report. Southeast Asian countries have become markets where Chinese groups obtained restricted chips, the report said, citing industry experts. The U.S. Commerce Department is discussing adding more export controls on advanced AI products to countries such as Thailand as soon as September, the report said. (Reporting by Jaspreet Singh in Bengaluru; Editing by Arun Koyyur)

Nvidia AI chips worth $1 billion entered China despite US curbs: FT - The Economic Times

These Nvidia AI chips were reportedly smuggled to China in the three months following tighter US export controls, including high-end B200 processors banned in China, Financial Times reported. Nvidia stated that using smuggled products available on the Chinese black market for data centres is technically and financially inefficient.Nvidia's advanced artificial intelligence chips worth at least $1 billion were smuggled to China in the three months after Washington tightened chip export controls, the Financial Times reported on Thursday. The AI chip designer's high-end B200 processors, banned for sale in China, is widely available on a thriving Chinese black market for U.S. chips, the report said, citing sales contracts, company filings and multiple people with direct knowledge of the deals. Nvidia told Reuters that building data centres with smuggled products is inefficient both technically and financially, as the company only offers service and support for authorised products. The U.S. Department of Commerce, White House and Thai government did not immediately respond to requests for comment. Reuters could not independently verify the FT report. In May, multiple Chinese distributors started selling B200s to suppliers of data centres that serve Chinese AI groups, according to the report. The U.S. and China are battling for global dominance in AI and other cutting-edge technologies, triggering a tightrope walk for companies such as Nvidia between the world's two largest economies. Nvidia last week said it would be allowed to resume sales to China after the Trump administration reversed an export restriction on the sales of chips such as H20. The curbs were imposed in April. In the three months before that, Chinese distributors from Guangdong, Zhejiang and Anhui provinces sold Nvidia's B200s, as well as other restricted processors such as the H100 and H200, according to the report. Southeast Asian countries have become markets where Chinese groups obtained restricted chips, the report said, citing industry experts. The U.S. Commerce Department is discussing adding more export controls on advanced AI products to countries such as Thailand as soon as September, the report said.

NVIDIA's GB200 "AI Servers" Are Reportedly Being Smuggled Into China, Even After Jensen Claimed They Weigh "Two Tons" and Can't End Up There

NVIDIA's high-end AI servers are unexpectedly ending up in China, showing that the flow of AI chips to the nation is consistent through several methods. The Trump administration has been concerned about US AI chips ending up in China through "shady means", and they are working towards regulating the flow, but even after the recent export controls, NVIDIA's AI equipment is consistently available in Chinese black markets. Based on a report by Financial Times, it is claimed that AI products worth at least $1 billion have ended up in China's AI markets ever since the US administration imposed the export controls, and even as large systems as GB200 AI servers are available in China. FT managed to take a look at several sales contracts and filings, and it was revealed that Chinese AI markets are most interested in NVIDIA's B200-powered systems, and interestingly, they are readily available in local markets. After the H20 AI accelerator was initially banned, many distributors managed to get their hands on the B200 AI system through several means, either by trade loopholes or grey channels that are yet to be patched out by the US government. Several Chinese provinces, notably Anhui, reportedly have a massive inventory of NVIDIA AI chips, which includes B200, H100, and H200. Interestingly, many Chinese companies allegedly accessing NVIDIA's chips through distributors have centres in regions like Singapore, and a large portion of these AI systems are labelled under Supermicro (SMCI) packaging. AI systems are available on several Chinese retail platforms, and many of the sellers are even showing live tests of these racks to show the legitimacy of these systems. Undoubtedly, China has high-end AI compute being sold readily on such platforms, indicating that the export controls haven't managed to thwart the flow of chips completely. Individuals are also selling the GB200 AI systems, which are one of NVIDIA's most sought-after platforms globally. While the FT couldn't verify the presence of the cluster in China's markets, many vendors are publicly confirming the availability of Grace Blackwell systems. However, an important point to note is that the volume of the AI equipment sold is negligible relative to the massive AI clusters being built globally, but the hardware is enough to cater to demands from low-to-mid Chinese CSPs. It would be interesting to see how the US responds to such claims, given that their "AI action" plans deals towards patching the flow of equipment to China by any means possible.

Nvidia's AI Chips Worth $1 Billion Flood China's Black Market After Trump's Export Restrictions: 'It's Like A Seafood Market' - NVIDIA (NASDAQ:NVDA)

Nvidia Corp.'s NVDA advanced AI processors worth over $1 billion were reportedly smuggled to China after the U.S. government's efforts to restrict chip exports. What Happened: The shipments took place within three months of President Donald Trump's tightened export controls. The B200, a chip widely used by U.S. tech giants for their AI systems, was the most sought-after chip in China's black market for American semiconductors, according to a report by the Financial Times on Thursday. Check out the current price of NVDA stock here. Chinese distributors began selling the B200 to data center suppliers serving Chinese AI groups soon after the Trump administration restricted the sale of the H20, a less-powerful Nvidia chip designed to comply with the regulations under former President Joe Biden. Distributors in China's Guangdong, Zhejiang, and Anhui provinces sold Nvidia's B200 chips along with other restricted processors like the H100 and H200. Total sales during this period are estimated to have exceeded $1 billion. Although it's legal to import and sell restricted Nvidia chips within China if the appropriate border tariffs are paid, entities that sell and ship them to China would be violating U.S. regulations. On social media, groups are formed to connect hundreds of traders with data center suppliers, aligning supply with demand. One distributor told the publication, "It's like a seafood market...There's no shortage." Nvidia has consistently maintained that there is "no evidence of any AI chip diversion". The company also said it is unaware of any of its restricted products being sold to China. SEE ALSO: Tucker Carlson's Milton Interview Sparks Outrage: Bill Ackman Backs Hindenburg Founder Against Former Nikola CEO, Calls Him 'Convicted Corporate Stock Market Fraudster' - Invesco QQQ Trust, Series 1 ( Why It Matters: The smuggling of Nvidia's AI chips to China comes amid the U.S. government's efforts to curb semiconductor smuggling into China. In early July, the U.S. government considered imposing restrictions on the export of AI chips, including those produced by Nvidia, to Malaysia and Thailand to prevent China from acquiring these components through intermediaries in these countries. Despite these efforts, the smuggling of Nvidia's chips to China continued, highlighting the challenges faced by the U.S. in controlling the flow of advanced technology to China. Last week, Nvidia CEO Jensen Huang revealed that the Trump administration would resume allowing the sale of the company's China-specific H20 chip. The news also follows Huang's recent high-profile visit to China, where he was hailed as a rockstar and received a warm reception. Huang's visit was seen as a sign of Nvidia's commitment to the Chinese market despite ongoing trade tensions between the U.S. and China. Benzinga's Edge Rankings place Nvidia in the 85th percentile for momentum and the 99th percentile for growth, reflecting its strong performance in both areas. Check the detailed report here. READ MORE: As Elon Musk, Mark Zuckerberg And Sam Altman Chase Nvidia AI Chips, Jensen Huang Says 'Just Call Me' -- Here's How Allocation Really Works Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. NVDANVIDIA Corp$172.270.87%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum85.14Growth98.69QualityN/AValue6.52Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Chinese Repair Shops Quietly Keep Smuggled Nvidia AI Chips Alive, Fixing Up To 500 Banned H100 GPUs Per Month As US Scrambles To Track Them: Report - NVIDIA (NASDAQ:NVDA)

A booming underground repair industry in China is breathing new life into banned Nvidia Corp. NVDA AI chips, raising alarms in Washington over enforcement gaps and national security risks. What Happened: Despite a U.S. export ban on Nvidia's advanced H100 and A100 graphics processing units (GPUs), Chinese tech firms are repairing hundreds of the restricted chips each month, reported Reuters on Thursday. Two repair companies in Shenzhen confirmed they service up to 500 Nvidia AI chips monthly, including H100s that were never legally sold in China, the report said. "There is really significant repair demand," said a co-owner of one repair firm, who recently created a new company to handle the AI chip influx. Their facilities include server rooms replicating data center environments to test the repaired chips. See Also: Elon Musk, Richest Man Alive, Is Asked How He Feels About Being Labeled 'Evil Billionaire' -- 'It's Not Like I've Got Some Massive Cash Balance' These GPUs, prized for AI training, are believed to have entered the country through large-scale smuggling, with evidence suggesting use by Chinese government and military entities. The U.S. has banned sales of these chips to China since 2022 to curtail its AI and defense advancements. Nvidia said only it and its authorized partners are allowed to service its hardware. "Using restricted products without approved hardware, software, and technical support is a nonstarter," a company spokesperson told the publication. Why It Matters: Earlier in the day, it was reported that over $1 billion worth of Nvidia's advanced AI chips, including the sought-after B200, were reportedly smuggled into China despite U.S. export restrictions. Last week, Nvidia CEO Jensen Huang announced that the Donald Trump administration would once again permit the sale of the company's H20 chip, which is specifically designed for the Chinese market. This development came shortly after Huang's widely publicized visit to China, where he was welcomed like a rock star and received an enthusiastic reception. Last month, Nvidia revised its financial strategy after U.S. export restrictions halted AI chip sales to China, leading to a $2.5 billion revenue loss in the first quarter of 2025. At the time, Huang said the company will no longer include China in future revenue or profit forecasts, calling any potential sales there a "bonus." Price Action: Nvidia shares rose 1.73% on Thursday, closing at $173.74 during regular trading hours. However, in Friday's pre-market session, the stock was down 0.14% at the time of writing, according to Benzinga Pro. Benzinga's Edge Stock Rankings indicate that Nvidia continues to demonstrate strong upward momentum across short, medium and long-term timeframes. Additional performance insights can be found here. Read Next: Ethereum Treasury Company Trend 'Will Accelerate', Says Bitwise's Matt Hougan -- Here's What It Means For ETH's Price Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: gguy via Shutterstock NVDANVIDIA Corp$173.23-0.29%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum86.89Growth98.70QualityN/AValue6.42Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

In China, repair demand for banned Nvidia AI chipsets booms

BEIJING/SHANGHAI -- Demand in China has begun surging for a business that, in theory, shouldn't exist: the repair of advanced Nvidia artificial intelligence chipsets that the U.S. has banned the export of to its trade and tech rival. Around a dozen boutique companies now offer repair services, according to two such firms in the tech hub of Shenzhen which say they predominantly fix Nvidia's H100 graphics processing units (GPUs) that have somehow made their way to the country, as well as A100 GPUs and a range of other chips. Even before it was launched, the H100 was banned from sale in China in September 2022 by U.S. authorities keen to rein in Chinese technological development, particularly advances that its military could use. Its predecessor, the A100, was also banned at the same time after being on the market for over two years. "There is really significant repair demand," said a co-owner of a firm that has been fixing Nvidia's gaming GPUs for 15 years and began working on AI chips in late 2024. Business has been so good that the owners created a new company to handle those orders, which now repairs up to 500 Nvidia AI chips per month. Its facilities, as shown in social media advertising, include a room which can accommodate 256 servers, simulating customers' data center environments to conduct testing and validate repairs. The rapid growth of the repair industry from late last year supports the view that there has been a significant amount of smuggling of Nvidia chipsets into China. Tenders have shown that the government and the military have made purchases of the U.S. firm's banned AI chips. Concern about large-scale smuggling of high-end Nvidia products into China has prompted both Republican and Democratic lawmakers to introduce bills that would require the tracking of chipsets so that their location can be verified after they are sold. U.S. President Donald Trump's administration also backed the idea this week. The thriving repair industry also highlights how Nvidia's advanced GPUs remain in high demand despite new, albeit less powerful, products from Chinese tech giant Huawei. Though the buying, selling and repair of Nvidia GPUs is not illegal in China, sources for this article were reluctant to draw scrutiny from U.S. or Chinese authorities and declined to be identified. Nvidia cannot legally provide repair or replacement items for restricted products in China. In contrast, sources said if an Nvidia GPU in another nation has a defect and is under warranty, which is normally three years, the company usually replaces it. An Nvidia spokesperson said only the company and authorized partners "are able to provide the service and support that customers need. Using restricted products without approved hardware, software, and technical support is a nonstarter, both technically and economically." Nvidia has only just been allowed to recommence sales of its H20 AI chipset, which has been specifically developed for China to comply with U.S. restrictions. Switching over to H20 chipsets is, however, not necessarily a simple or good option for Chinese entities. Price is an issue as one H20 server with eight GPUs inside will likely cost more than 1 million yuan (US$139,400), industry sources say. H20 chipsets, which have increased memory bandwidth, have been specifically designed for AI inference work, but firms involved in the training of large language models would likely prefer H100 chipsets which are better suited to that task. Industry sources said some of the H100 and A100 GPUs in China have been crunching data around the clock for years now, leading to an increase in failure rates. Depending on how frequently a GPU is used and how often it is maintained, an Nvidia GPU generally lasts two to five years before needing to be repaired, they said. According to the first source, his company charges between 10,000 yuan and 20,000 yuan ($1,400 to $2,800) to fix a GPU depending on the complexity of the problem. The second Shenzhen-based repair service provider - which shifted from GPU rentals to repairs this year - says it can repair up to 200 Nvidia AI chips each month, charging about 10 per cent of the GPUs' original selling price per repair. Services generally include software testing, fan repair, printed circuit board and GPU memory fault diagnostics and repair, as well as the replacement of broken parts. In the meantime, smuggling of high-end Nvidia chips continues. Traders of chips in China say customer demand is pivoting to top-of-the-line B200 chips which Nvidia began shipping to other countries in larger quantities this year. A server with eight B200 GPUs costs more than 3 million yuan in China, they said.

Nvidia AI chips worth $1B smuggled into China after Trump imposed US...

At least $1 billion in Nvidia computer chips were smuggled into China in the three-months span after President Trump imposed export controls on the cutting-edge chips, according to a bombshell report Thursday. Nvidia's powerful B200 chip - favored by US tech giants like OpenAI and Google to power their artificial intelligence models - are banned for sale to China due to government rules limiting shipments for chips that exceed certain performance thresholds. However, the chip was still being sold in May by Chinese suppliers to data center operators that support China-based tech firms, the Financial Times reported, citing an analysis of sales contracts, company filings and interviews with sources with direct knowledge of the deals. "Export controls will not prevent the most advanced Nvidia products from entering China," a Chinese data center operator told the FT. "What it creates is just inefficiency and huge profits for the risk-taking middle men." In May, the Trump administration had banned Nvidia from selling less-powerful H20 chips that were specifically built by the company to adhere to previous export controls imposed on their more powerful chips during the Biden administration. However, Nvidia boss Jensen Huang revealed last week that Trump had reversed course and would allow H20 chips to be sold in China. Critics have argued that China-based companies were circumventing the export controls to acquire Nvidia's hardware. That speculation surged earlier this year after reports that China-based AI firm DeepSeek had a greater supply of Nvidia chips than it publicly admitted. The FT said it reviewed evidence that Chinese distributors in the Guangdong, Zhejiang and Anhui provinces had sold Nvidia's B200 and other restricted chips such as the H100 and H200. The FT said there was no evidence that Nvidia had any involvement or knowledge of illicit chip sales to Chinese entities. The company has long said that it complies with all US laws on chip technology. "Trying to cobble together data centers from smuggled products is a losing proposition, both technically and economically," Nvidia said in a statement. "Data centers require service and support, which we provide only to authorized Nvidia products." Last month, the chip supplier became the first public company in history to surpass a $4 trillion market valuation.

Nvidia AI chips worth US$1 billion entered China despite U.S. curbs, FT reports

The AI chip designer's high-end B200 processors, banned for sale in China, is widely available on a thriving Chinese black market for U.S. chips, the report said, citing sales contracts, company filings and multiple people with direct knowledge of the deals. Nvidia told Reuters that building data centres with smuggled products is inefficient both technically and financially, as the company only offers service and support for authorized products. The U.S. Department of Commerce, White House and Thai government did not immediately respond to requests for comment. Reuters could not independently verify the FT report. In May, multiple Chinese distributors started selling B200s to suppliers of data centres that serve Chinese AI groups, according to the report. The U.S. and China are battling for global dominance in AI and other cutting-edge technologies, triggering a tightrope walk for companies such as Nvidia between the world's two largest economies. Nvidia last week said it would be allowed to resume sales to China after the Trump administration reversed an export restriction on the sales of chips such as H20. The curbs were imposed in April. In the three months before that, Chinese distributors from Guangdong, Zhejiang and Anhui provinces sold Nvidia's B200s, as well as other restricted processors such as the H100 and H200, according to the report. Southeast Asian countries have become markets where Chinese groups obtained restricted chips, the report said, citing industry experts. The U.S. Commerce Department is discussing adding more export controls on advanced AI products to countries such as Thailand as soon as September, the report said. ---

In China, repair demand for banned Nvidia AI chipsets booms

BEIJING/SHANGHAI (Reuters) -Demand in China has begun surging for a business that, in theory, shouldn't exist: the repair of advanced Nvidia artificial intelligence chipsets that the U.S. has banned the export of to its trade and tech rival. Around a dozen boutique companies now offer repair services, according to two such firms in the tech hub of Shenzhen which say they predominantly fix Nvidia's H100 graphics processing units (GPUs) that have somehow made their way to the country, as well as A100 GPUs and a range of other chips. Even before it was launched, the H100 was banned from sale in China in September 2022 by U.S. authorities keen to rein in Chinese technological development, particularly advances that its military could use. Its predecessor, the A100, was also banned at the same time after being on the market for over two years. "There is really significant repair demand," said a co-owner of a firm that has been fixing Nvidia's gaming GPUs for 15 years and began working on AI chips in late 2024. Business has been so good that the owners created a new company to handle those orders, which now repairs up to 500 Nvidia AI chips per month. Its facilities, as shown in social media advertising, include a room which can accommodate 256 servers, simulating customers' data centre environments to conduct testing and validate repairs. The rapid growth of the repair industry from late last year supports the view that there has been a significant amount of smuggling of Nvidia chipsets into China. Tenders have shown that the government and the military have made purchases of the U.S. firm's banned AI chips. Concern about large-scale smuggling of high-end Nvidia products into China has prompted both Republican and Democratic lawmakers to introduce bills that would require the tracking of chipsets so that their location can be verified after they are sold. U.S. President Donald Trump's administration also backed the idea this week. The thriving repair industry also highlights how Nvidia's advanced GPUs remain in high demand despite new, albeit less powerful, products from Chinese tech giant Huawei. Though the buying, selling and repair of Nvidia GPUs is not illegal in China, sources for this article were reluctant to draw scrutiny from U.S. or Chinese authorities and declined to be identified. Nvidia cannot legally provide repair or replacement items for restricted products in China. In contrast, sources said if an Nvidia GPU in another nation has a defect and is under warranty, which is normally three years, the company usually replaces it. An Nvidia spokesperson said only the company and authorised partners "are able to provide the service and support that customers need. Using restricted products without approved hardware, software, and technical support is a nonstarter, both technically and economically." REPAIR DEMAND MAY NOT FADE Nvidia has only just been allowed to recommence sales of its H20 AI chipset, which has been specifically developed for China to comply with U.S. restrictions. Switching over to H20 chipsets is, however, not necessarily a simple or good option for Chinese entities. Price is an issue as one H20 server with eight GPUs inside will likely cost more than 1 million yuan ($139,400), industry sources say. H20 chipsets, which have increased memory bandwidth, have been specifically designed for AI inference work, but firms involved in the training of large language models would likely prefer H100 chipsets which are better suited to that task. Industry sources said some of the H100 and A100 GPUs in China have been crunching data around the clock for years now, leading to an increase in failure rates. Depending on how frequently a GPU is used and how often it is maintained, an Nvidia GPU generally lasts two to five years before needing to be repaired, they said. According to the first source, his company charges between 10,000 yuan and 20,000 yuan ($1,400 to $2,800) to fix a GPU depending on the complexity of the problem. The second Shenzhen-based repair service provider - which shifted from GPU rentals to repairs this year - says it can repair up to 200 Nvidia AI chips each month, charging about 10% of the GPUs' original selling price per repair. Services generally include software testing, fan repair, printed circuit board and GPU memory fault diagnostics and repair, as well as the replacement of broken parts. In the meantime, smuggling of high-end Nvidia chips continues. Traders of chips in China say customer demand is pivoting to top-of-the-line B200 chips which Nvidia began shipping to other countries in larger quantities this year. A server with eight B200 GPUs costs more than 3 million yuan in China, they said. (Reporting by Che Pan in Beijing and Casey Hall in Shanghai; Additional reporting by Stephen Nellis in San Francisco; Editing by Anne Marie Roantree and Edwina Gibbs)