The black market for Nvidia H100, A100 AI GPUs is exploding – US-imposed export sanctions are causing Chinese buyers to come up with creative techniques to get their hands on precious cargo

July 12, 2024

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The black market for Nvidia H100, A100 AI GPUs is exploding – US-imposed export sanctions are causing Chinese buyers to come up with creative techniques to get their hands on precious cargo

In October 2022, the Biden administration announced that it would impose restrictions on the sale of new semiconductors to China, with the aim of slowing the progress of China’s technology sector.

Companies like Huawei therefore have to become increasingly creative to circumvent the restrictions, but this is not easy.

The US blocked the import of high-end Nvidia GPUs into China in a bid to tighten controls over critical AI technology, and it has inadvertently fueled a thriving underground market there. Chinese buyers, undeterred by the sanctions, are using remarkably ingenious tactics to smuggle in high-end Nvidia GPUs like the H100 and A100.

There is always a way

The Wall Street Journal (WSJ) reports that some travelers are now stashing advanced Nvidia chips in their luggage. The outlet reviewed documents, including customs declarations, that showed Nvidia chips were being purchased by Chinese buyers on an underground market.

A distributor from Beijing said WSJ reporters that he receives dozens of chips each month, claiming that “there’s always a way” to get them to China. Another broker, who acted as an intermediary, described using personal contacts at official distribution channels and system integrators in Southeast Asia to obtain the chips, omitting model numbers on paper to avoid detection.

In April 2024, Reuters reported that Chinese universities and research institutes, including the Chinese Academy of Sciences and the Shandong Artificial Intelligence Institute, were able to acquire Nvidia chips through resellers.

While stricter regulations under the Advanced Computing Chips Rule attempt to curb this flow, the black market continues to thrive and adapt. As the technological arms race intensifies, both sides use increasingly sophisticated measures to outsmart each other in this high-stakes game of technological cat and mouse.