Approximately $1 billion worth of Nvidia's advanced AI chips, specifically the high-end B200 processors, have been reportedly smuggled into China in the three months following stricter US export controls. These chips, banned for sale in China, are widely available on a thriving black market, with evidence from sales contracts, company filings, and insider accounts.
Chinese distributors started selling B200s to data center suppliers serving Chinese AI groups in May. One company in Anhui, for instance, reportedly sold nearly $400 million worth of "ready-built racks" containing B200s for around $489,000 per rack. While Nvidia has not confirmed or denied the black market sales, they stated that data centers built with smuggled products are inefficient due to a lack of official service and support.
Other restricted Nvidia processors like the H100 and H200 have also made their way to China through illicit channels. Southeast Asian countries, such as Malaysia and Thailand, have become key routes for these smuggled chips. The US Commerce Department is reportedly considering adding more export controls on advanced AI products to these countries as soon as September.
This surge in black market activity highlights the limitations of US trade policy in controlling the movement of highly sought-after AI technology. Despite the US-China battle for AI dominance and Nvidia's delicate position, the illicit trade continues, driven by high demand and significant profits. Some reports indicate that prices for these banned chips have doubled due to the scarcity created by export restrictions.
