CHINA BUYING NVIDIA CHIPS Despite stringent U.S. export restrictions
THE ATTACK…
Despite stringent U.S. export restrictions aimed at curbing China's access to advanced technology, Chinese buyers are managing to acquire Nvidia’s latest Blackwell AI chips. These chips, crucial for powering artificial intelligence applications, are being routed through third-party entities in nearby regions such as Taiwan, Malaysia, and Vietnam. Vendors in China are offering servers containing eight Blackwell chips for over $600,000, a significant premium above global prices, demonstrating the high demand and the lengths to which buyers will go to circumvent U.S. controls. This trade, which began with Nvidia’s initial Blackwell shipments in December, already accounts for roughly 30% of the company’s $11 billion in sales from its latest quarter ending in January.
The process involves a sophisticated network of resellers and intermediaries exploiting loopholes in the export restrictions. For instance, a vendor in Shenzhen secured an order for over a dozen Blackwell servers from a Shanghai customer, with a $3 million deposit placed in an escrow account. Other resellers utilize companies registered outside China to purchase Nvidia servers from existing customers in neighboring countries, who then redirect a portion of these products to the Chinese market. This barely concealed trade highlights the challenges the U.S. Commerce Department faces in enforcing its sanctions, as some merchants boast of delivering large quantities within weeks, often in original wholesale packaging.
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Nvidia has emphasized its compliance with U.S. export rules, stating that it sells only to authorized customers and relies on them to adhere to legal onward sales. However, the premium pricing in China—echoing past trends with Nvidia’s A100 and H100 chips, which sold for double or more their standard rates—underscores the persistent demand for cutting-edge AI technology among Chinese firms. While U.S. officials have tightened controls and investigated potential breaches, the Commerce Department’s limited enforcement capacity and the lack of cooperation from some intermediary nations complicate efforts to stem this flow. As China’s AI ambitions continue to grow, this situation raises questions about the effectiveness of current restrictions in slowing its technological progress.