Nvidia Chips Smuggled to China

Despite US export controls, approximately $1 billion worth of Nvidia AI chips, particularly the high-end B200 processors, were smuggled into China. These chips are highly sought after on the Chinese black market, with distributors selling them to data centres that support Chinese AI initiatives. The processors were smuggled into China in the three months after the Trump administration tightened chip export controls.

Nvidia has stated it has no evidence of AI chip diversion and that it does not condone or participate in any unauthorised sales to China. The company also stated that constructing data centres using smuggled products is technically and economically unsound, as service and support are exclusively available for authorised products.

It is believed that Southeast Asian countries are becoming hubs for Chinese groups to acquire restricted chips. The US Commerce Department is considering additional export restrictions on sophisticated AI products to countries such as Thailand. This situation highlights the intense technology competition between the US and China as they compete for global AI dominance, posing challenges for companies like Nvidia.