Illegal Smuggling of Nvidia AI Chips into China: A Billion-Dollar Operation
Despite stringent U.S. export restrictions, Nvidia’s advanced AI chips worth at least $1 billion have been smuggled into China in a mere span of three months. This revelation comes from an investigation conducted by the Financial Times. The chips in question, Nvidia’s high-performance B200 processors, are currently banned for sale in China. However, they are now readily available on a burgeoning Chinese black market for U.S. chips.
The smuggling operation involves ready-made server racks laden with multiple processors. These can be installed into data centers without significant hardware integration. Interestingly, these same B200 chips are the choice of major U.S. AI companies including OpenAI, Google, and Meta for training their latest AI systems.
Chinese distributors from provinces such as Guangdong, Zhejiang, and Anhui have been linked to these illegal shipments. In response to these allegations, Nvidia stated, “Trying to cobble together data centers from smuggled products is a losing proposition, both technically and economically.” The company further emphasized that it only provides service and support for authorized products.
This smuggling operation underscores the limitations of U.S. trade policy in controlling the movement of sought-after AI technology. It’s noteworthy that these chips are selling at a 50% premium in China compared to U.S. prices.
Source: CNBC