An estimated $1 billion of smuggled Nvidia AI processors has reportedly reached the Chinese black market, highlighting the limitations of US trade policy in controlling advanced technology exports. The chips in question belong to Nvidia's B200 series and are distributed in ready-made racks for easy installation in datacenters. Despite strict restrictions, these processors have been obtained through unscrupulous distributors in neighboring countries such as Malaysia and Thailand, revealing a thriving underground market for advanced semiconductors in China, which lags in domestic chip production capabilities.
The eyebrow-raising figure, which Nvidia has neither confirmed nor refuted, was revealed by the Financial Times, which claims to have based its reporting on a combination of interviews and analyses of company filings and sales contracts.
The specific chips cited are Nvidia's B200 series, part of the Blackwell architecture that debuted last year. These chips are used by virtually all US AI powerhouses, including Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and others.
Exports of advanced Nvidia chips to China have been sharply restricted by US trade policy. That doesn't seem to have stopped the chips from making their way into the Middle Kingdom through less scrupulous distributors.
China's capacity for chip fabrication has lagged behind its economic competitors. Foremost among these is Taiwan, China's contentious neighbor and home to fab giant TSMC, which manufactures most of Nvidia's chips.
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