How Chinese are buying NVIDIA's latest AI chips despite restrictions
What's the story
Despite strict US export controls, Chinese buyers have been able to acquire NVIDIA's latest artificial intelligence (AI) chips. The traders are bypassing these restrictions by using third-party sellers based in neighboring countries. The move highlights the difficulties the Donald Trump administration is facing in restricting access to advanced American technology. The transactions involve a growing underground network of brokers that has emerged since 2022, when Washington imposed export controls restricting China's access to semiconductors for AI training and operation.
Market response
Chinese tech companies defy US export controls
In January, Shenzhen-based vendor James Luo received an order for over a dozen Blackwell chips from a Shanghai-based client who deposited some $3 million into an escrow account. Luo plans to ship the units by mid-March. This particular transaction is part of a wider trend where Chinese resellers are using entities registered outside China to buy NVIDIA chips from companies in Malaysia, Vietnam, and Taiwan. These firms then sell some of the processors to China despite US restrictions.
Company stance
NVIDIA's response and Biden administration's measures
NVIDIA has said it will look into any reports of possible diversion and take action accordingly. The company stressed that clients for cutting-edge AI gear need services and support, which "none of the anonymous traders claiming to possess Blackwell systems can provide." In its last days in office, the Joe Biden administration took strict measures such as country caps on AI chip purchases worldwide to stop nations from serving as shipment points for large quantities of chips headed for China.
Chip demand
Chinese companies ramp up orders for NVIDIA's H20 chip
Chinese companies are ramping up their orders for NVIDIA's H20 chip, the most powerful among those not covered by US export controls. Industry insiders revealed that local cloud-computing giants like Alibaba, Tencent, and ByteDance are buying more H20s in anticipation of potential inclusion in future export controls. However, US AI executives have said they are adding hundreds of thousands of chips to their inventory—far surpassing what Chinese sellers can offer.