$1 billion of NVIDIA AI chips were reportedly sold in China despite US bans

The Financial Times has reported that $1 billion worth of NVIDIA AI chips were smuggled into China in the three months following the Trump administration's tightening of semiconductor export controls. A thriving black market for American semiconductors emerged, with products including NVIDIA's top-tier B200 chips being sold to China, despite being banned by the US. The B200, H100, and H200 chips are highly sought after, but restricted, while the weaker H20 chip, designed to comply with export restrictions, has faced on and off export bans. NVIDIA denies any evidence of AI chip diversion, stating that attempting to build data centers with smuggled products is not viable. Images show server racks with company logos such as Supermicro and ASUS being advertised on social media in China, but these companies deny any involvement. Some Southeast Asian countries have become hubs for Chinese groups to obtain restricted chips, potentially circumventing US export controls. The US Department of Commerce is considering increasing export controls on advanced AI chips to these countries. The demand for these products is high, and Chinese distributors believe that given the huge profit, ways will be found to obtain them. The smuggling operation involves a complex web of third-party data center operators, middlemen, and purportedly smuggled ready-built racks. The Financial Times' reporting suggests that the black market for NVIDIA chips is thriving, despite efforts to restrict their sale to China.