Reports indicate approximately $1 billion worth of NVIDIA AI chips have been illegally exported to China despite controls.
According to Financial Times analysis of dozens of sales contracts, company filings, and interviews with those involved in the transactions, at least $1 billion worth of Nvidia's restricted artificial intelligence processors were smuggled into China in the three months following the Trump administration's tightening of chip export controls. Nvidia's B200 chip has emerged as the most sought-after processor in China's black market for U.S. semiconductors, despite efforts to curb Beijing's high-tech ambitions. Beyond the B200, Chinese distributors also sold restricted H100 and H200 models during this period.
Transactions were facilitated by distributors operating in China's Guangdong, Zhejiang, and Anhui provinces, who sold the chips in ready-built racks containing eight B200s along with other necessary components and software. The current market price for such a rack ranges between 3 million to 3.5 million yuan ($489,000), representing a 50 percent premium over average selling prices for similar products in the U.S. While Chinese entities receiving and selling restricted Nvidia chips are permitted under law as long as relevant border tariffs are paid, those sending chips to China are violating U.S. regulations. Nvidia has stated there is no evidence of any AI chip diversion and that the company is not involved in or aware of its restricted products being sold to China.
The high demand for B200 chips stems from their performance, value, and relatively easy maintenance compared to more complex models. Leading Chinese AI players with global operations cannot legally order these chips, install them in their own data centers, or receive Nvidia's customer support. According to Scale AI CEO Alexandr Wang, DeepSeek is covertly using around 50,000 Nvidia H100 GPUs despite U.S. export restrictions, with DeepSeek workers unable to publicly discuss their use of these chips. Elon Musk agreed with Wang's assertion after the statement was posted to X. Third-party data center operators have become key buyers, providing computing services to smaller companies in tech, finance, and healthcare that do not have strong compliance requirements.
Southeast Asian countries have become critical markets where Chinese groups obtain restricted chips. Industry experts note that Thailand and Malaysia are key transhipment points, prompting the U.S. Department of Commerce to consider adding more export controls on advanced AI products to these countries. Malaysia has already introduced stricter export controls targeting advanced AI chip shipments to other destinations, particularly China. Chinese industry insiders believe that new shipping routes through European countries not on the restricted list are already becoming operational. The potential tightening of controls on Southeast Asian countries has also driven buyers to rush orders before new rules take effect.
The scale of the black market exposes the limits of Washington's efforts to restrain Beijing's high-tech ambitions. While export controls have prevented leading Chinese AI players from legally purchasing and installing restricted chips in their own data centers, the demand for cutting-edge technology remains high, with risk-taking middlemen continuing to step in and meet this demand through established and emerging smuggling routes.