{"id":19781,"date":"2025-07-25T00:11:10","date_gmt":"2025-07-25T00:11:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/19781\/"},"modified":"2025-07-25T00:11:10","modified_gmt":"2025-07-25T00:11:10","slug":"nvidia-ai-chips-worth-1bn-smuggled-to-china-after-trump-export-controls","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/19781\/","title":{"rendered":"Nvidia AI chips worth $1bn smuggled to China after Trump export controls"},"content":{"rendered":"

At least $1bn worth of Nvidia\u2019s advanced artificial intelligence processors were shipped to China in the three months after Donald Trump tightened chip export controls, exposing the limits of Washington\u2019s efforts to restrain Beijing\u2019s high-tech ambitions.<\/p>\n

A Financial Times analysis of dozens of sales contracts, company filings and multiple people with direct knowledge of the deals reveals that Nvidia\u2019s B200 has become the most sought-after \u2014 and widely available \u2014 chip in a rampant Chinese black market for American semiconductors. <\/p>\n

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.<\/p>\n

In May, multiple Chinese distributors started selling B200s to suppliers of data centres 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 \u2014 a less-powerful Nvidia chip tailored to comply with Joe Biden-era curbs.<\/p>\n

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.<\/p>\n

Last week, Nvidia chief Jensen Huang announced<\/a> that the Trump administration would begin to allow the selling of its China-specific H20 chip once more.<\/p>\n

In the three months beforehand, Chinese distributors from Guangdong, Zhejiang and Anhui provinces sold Nvidia\u2019s B200s, as well as other restricted processors such as the H100 and H200. <\/p>\n

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 $1bn. <\/p>\n

Nvidia has long insisted there is \u201cno evidence of any AI chip diversion\u201d. There is no evidence that the company is involved in, or has knowledge of, its restricted products being sold to China.<\/p>\n

\u201cTrying to cobble together data centres from smuggled products is a losing proposition, both technically and economically,\u201d Nvidia told the FT. \u201cData centres require service and support, which we provide only to authorised Nvidia products.\u201d <\/p>\n

\u2018The new century of a smart China\u2019<\/p>\n

One Anhui-based company whose name translates to \u201cGate of the Era\u201d is one of the largest sellers of B200s, according to documents seen by the FT.<\/p>\n

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.<\/p>\n

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 150kg including packaging.<\/p>\n

The current market price ranges between Rmb3mn to Rmb3.5mn ($489,000) per rack, down from more than 4mn in mid-May when they first became available in China in large quantities. The current prices represent about a 50 per cent premium from the average selling price of similar products in the US.<\/p>\n

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 \u2014 or indirectly via secondary distributors \u2014 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.<\/p>\n

\"\"The registered headquarters of Gate of the Era in a government-run industrial park dedicated to cryptography companies \u00a9 FT<\/p>\n

Gate of the Era lists an AI solution provider China Century \u2014 or Huajiyuan in Chinese \u2014 as its largest shareholder, according to company registration files. <\/p>\n

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 \u201cthe new century of a smart China\u201d.<\/p>\n

China Century claims to have more than 100 business partners and highlights AliCloud, ByteDance\u2019s Huoshan Cloud, as well as Baidu Cloud as \u201ctrusted partners\u201d on its website. <\/p>\n

AliCloud and Baidu did not respond to requests for comment. Huoshan Cloud\u2019s name was taken off China Century\u2019s website after the FT approached them for comment. Huoshan Cloud said: \u201cIt is standard practice for any company to manage the unauthorised use of its logo.<\/p>\n

\u201cWe have not procured Nvidia\u2019s chips. We do not have any related [Nvidia chip] business,\u201d said China Century, adding that it did \u201csmart city work\u201d. <\/p>\n

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. <\/p>\n

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.<\/p>\n

\"PhotographA previous office address registered to Gate of the Era in Shanghai \u00a9 FT<\/p>\n

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 centres. <\/p>\n

There is no suggestion that Supermicro is involved in or has knowledge of its products being smuggled into China. Supermicro said it \u201ccomplies with all US export control requirements on the sale and export of GPU systems\u201d.\u00a0<\/p>\n

\u201cExport controls will not prevent the most advanced Nvidia products from entering China,\u201d said one Chinese data centre operator. \u201cWhat it creates is just inefficiency and huge profits for the risk-taking middle men.\u201d <\/p>\n

Some content could not load. Check your internet connection or browser settings.<\/p>\n

\"A\u2018It\u2019s like a seafood market\u2019<\/p>\n

Some Chinese distributors openly market products such as Supermicro\u2019s B200 racks on social media that show photos of packages with the company\u2019s logo \u2014 although it has not been verified if the sales have been completed. <\/p>\n

To showcase the \u201cplug-and-use\u201d 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. <\/p>\n

On social media, groups are created to match supply and demand from hundreds of traders and data centre suppliers. <\/p>\n

Recommended<\/p>\n

\"The<\/a><\/p>\n

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.<\/p>\n

Packaging and installation pictures and videos seen by the FT show product logos of companies such as Supermicro, Dell and Asus \u2014 infrastructure providers that assemble Nvidia\u2019s chips into servers. <\/p>\n

There is no suggestion these companies are aware of the social media advertising or their products being sold in China. <\/p>\n

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.<\/p>\n

\u201cIt\u2019s like a seafood market,\u201d said one distributor, \u201cThere\u2019s no shortage.\u201d<\/p>\n

\"AA Supermicro box appears in a social media post from a user purporting to have H200 racks for sale in China \"EightAnother post claims to have 100 Asus H200 racks for sale Racks for sale \u2014 with more smuggled stock to come<\/p>\n

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. <\/p>\n

The GB200 AI rack, containing Nvidia\u2019s most high-end products, also appear to be available in China despite US export controls. <\/p>\n

One distributor claimed it had sold 10 racks of GB200 at close to Rmb40mn ($5.6mn) each. The FT could not independently verify this claim, while marketing information about GB200 from various distributors\u2019 accounts on social media shows consistent pricing and stock status as \u201cavailable for pick up onshore\u201d.<\/p>\n

Some Chinese distributors have even started advertising for their future stock of B300s, Nvidia\u2019s upgrade from the B200 expected to enter mass production in the fourth quarter of this year.<\/p>\n

Recommended<\/p>\n

\"Second-hand<\/a><\/p>\n

US export controls have had some effect on the black market. <\/p>\n

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 centres or receive Nvidia\u2019s customer support. <\/p>\n

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 healthcare 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.<\/p>\n

However, the scale of these projects are much smaller compared with mega clusters of data centres being built by tech giants around the world.<\/p>\n

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.<\/p>\n

Black market sales for B200s and other restricted Nvidia chips dropped noticeably after the relaxation of the H20 ban, according to multiple distributors. <\/p>\n

\u201cPeople are weighing their options now H20 is available again,\u201d said one distributor. \u201cBut there will always be demand for the most cutting-edge stuff.\u201d<\/p>\n

The south-east Asia stop off<\/p>\n

Industry experts said that south-east Asian countries have become markets where Chinese groups obtained restricted chips.<\/p>\n

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. <\/p>\n

The US commerce department declined to comment. The Thai government did not respond to a request for comment.<\/p>\n

Earlier this month, Malaysia introduced stricter export controls targeting advanced AI chip shipments from the country to other destinations, especially China.<\/p>\n

The potential tightening of export controls on south-east Asian countries has also contributed to buyers rushing to place orders before such rules take effect, according to people with knowledge of the matter.<\/p>\n

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.<\/p>\n

\u201cHistory has proven many times before that given the huge profit, arbitrators will always find a way,\u201d said one Chinese distributor.<\/p>\n

Visuals by James Sandy, Rory Griffiths and Alex Wheeler in London. <\/p>\n

Additional reporting by Michael Acton in San Francisco, Demetri Sevastopulo in Washington and Anantha Lakshmi in Jakarta.<\/p>\n","protected":false},"excerpt":{"rendered":"At least $1bn worth of Nvidia\u2019s advanced artificial intelligence processors were shipped to China in the three months…\n","protected":false},"author":2,"featured_media":19782,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,64,63,105],"class_list":{"0":"post-19781","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-au","12":"tag-australia","13":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/19781","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=19781"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/19781\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/19782"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=19781"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=19781"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=19781"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}