A recent investigation by the Financial Times in the UK has revealed that over the past three months, more than $1 billion worth of Nvidia’s high-end artificial intelligence chips have been smuggled into China.
Since April, Nvidia’s B200 chips, which were banned from being exported to China by the US government, have been thriving in China’s black market and are easily accessible.
According to the investigation report, Chinese government agencies are involved in this issue, and US server giants may also inadvertently be implicated.
Nvidia’s official website describes the B200 chip as utilizing the Blackwell architecture, capable of handling various workloads including large language models, recommendation systems, and chatbots, making it ideal for enterprises looking to accelerate their AI transformation.
It is reported that multiple Chinese distributors began selling the B200 chip in May to data center providers servicing Chinese AI companies. These distributors in Guangdong, Zhejiang, and Anhui provinces were also selling other restricted processors like the H100 and H200 before the US export control regulations were announced.
Informants estimate that the sales revenue of Nvidia chips smuggled into China over the past three months exceeds $1 billion.
One of the Chinese distributors investigated by the Financial Times, “Gate of the Era,” registered in Anhui and Shanghai on the same day, has become one of the largest distributors in this wave of B200 sales, selling at least nearly $400 million worth of B200 chips.
According to registration information, the AI solutions provider “Huaji Yuan Technology” is the largest shareholder of “Gate of the Era.” Huaji Yuan claims to have a lab in Silicon Valley and a supply chain center in Singapore, with over 100 business partners including Alibaba’s Alibaba Cloud, ByteDance’s Volcano Engine, and Baidu’s Baidu Cloud.
Starting from mid-May, “Gate of the Era” received at least two shipments of around several hundred racks of B200 into China, which were then resold directly or indirectly through other distributors to data center providers and other companies. These Chinese distributors openly advertised the chips on platforms like Xiaohongshu, emphasizing “available in stock.”
The investigation also found that these chips appear to have been obtained through server providers and bear packaging labels of chip assemblers such as Super Micro Computer, Asus, and Dell Technologies. There is currently no evidence indicating whether these companies were aware or involved in their products being smuggled into China. Typically, chip assemblers provide chip solutions to data centers by embedding high-end chips like Nvidia’s in servers.
The current black market price for the B200 chip in China ranges from 3 to 3.5 million RMB per rack (approximately $489,000), lower than the initial purchase price exceeding 4 million RMB back in mid-May, but still around 50% higher than the average selling price in the US for similar products.
The investigation mentions that Southeast Asian countries have become important markets and transit stations for Chinese companies to acquire restricted chips. The US Department of Commerce is reportedly discussing the implementation of additional export controls on advanced AI products to countries like Thailand as early as September.
In a statement, Nvidia stated that attempting to build data centers through smuggling products is doomed to fail both technically and economically. The company only provides services for authorized Nvidia products.
Per the regulations of the Bureau of Industry and Security (BIS) at the US Department of Commerce, all parties involved in transactions subject to the Export Administration Regulations (EAR) must abide by these regulations, including exporters, freight forwarders, carriers, consignees, and other participants in the export transaction.
The EAR applies not only to parties within the US but also to foreign entities involved in transactions subject to the EAR.
Several distributors have mentioned a significant decrease in the black market sales of B200 and other restricted Nvidia chips in China after the US announced the relaxation of the H20 ban in July.
“Now that H20 is available again, people are weighing their options,” a distributor told the Financial Times, “but demand for the most cutting-edge products always exists.”