"A rampant black market": Nvidia chips smuggled into China despite US sanctions

At least $1 billion worth of Nvidia's advanced artificial intelligence (AI) chips were shipped to China in the three months after the US imposed export controls, the British newspaper Financial Times reports.

The outlet consulted several industry sources and analyzed sales contracts and corporate documents to paint a picture of what it describes as a "rampant black market for American chips" in China, with particular interest in Nvidia's B200 chip, used by OpenAI, Google, and Meta to train their AI models and banned from sale in China.

However, the FT investigation claims that multiple Chinese distributors began selling B200 chips to data center providers as early as May, after the Donald Trump administration restricted the sale of H20 chips, a less powerful model made for the Chinese market following restrictions also imposed by his predecessor, Joe Biden.

Other chips also banned from sale in China, such as the H100 and H200, were also found for sale in several Chinese provinces in recent months. This would violate US law, but according to legal experts, not Chinese law, which would allow the sale of restricted chips as long as the corresponding customs fees are paid upon arrival in the country.

Chinese intermediaries are said to be using third countries , especially in Southeast Asia, to bring in the restricted chips.

Sellers advertise openly on social media platforms like Douyin, the local version of TikTok, or Xiaohongshu, the "Chinese Instagram," and sometimes display packages with logos of companies like Dell or Supermicro, infrastructure providers that mount Nvidia chips in servers.

"It's like a seafood market. There's no shortage," one dealer explained, as quoted by the FT . The main destination for black market chips would not be the giants of the Chinese AI sector, but smaller companies, sanctioned firms, or independent data center operators.

Nvidia said it has no evidence of its restricted products being sold in China, adding that data centers "require service and support," making these operations a "technical and financial loser " since the company only offers them to authorized product holders.

In any case, the US recently lifted its ban on the sale of H20 chips to China as part of trade negotiations with Beijing , and this has led to a "notable reduction" in black market demand for other chips such as B200, according to one distributor interviewed, although "there will always be demand for the most advanced products."