Nvidia Corp.’s NVDA advanced AI processors worth over $1 billion were reportedly smuggled to China after the U.S. government’s efforts to restrict chip exports.
What Happened: The shipments took place within three months of President Donald Trump’s tightened export controls. The B200, a chip widely used by U.S. tech giants for their AI systems, was the most sought-after chip in China’s black market for American semiconductors, according to a report by the Financial Times on Thursday.
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Chinese distributors began selling the B200 to data center suppliers serving Chinese AI groups soon after the Trump administration restricted the sale of the H20, a less-powerful Nvidia chip designed to comply with the regulations under former President Joe Biden.
Distributors in China’s Guangdong, Zhejiang, and Anhui provinces sold Nvidia’s B200 chips along with other restricted processors like the H100 and H200. Total sales during this period are estimated to have exceeded $1 billion.
Although it’s legal to import and sell restricted Nvidia chips within China if the appropriate border tariffs are paid, entities that sell and ship them to China would be violating U.S. regulations.
On social media, groups are formed to connect hundreds of traders with data center suppliers, aligning supply with demand. One distributor told the publication, “It’s like a seafood market…There’s no shortage.”
Nvidia has consistently maintained that there is “no evidence of any AI chip diversion”. The company also said it is unaware of any of its restricted products being sold to China.
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Why It Matters: The smuggling of Nvidia’s AI chips to China comes amid the U.S. government’s efforts to curb semiconductor smuggling into China.
In early July, the U.S. government considered imposing restrictions on the export of AI chips, including those produced by Nvidia, to Malaysia and Thailand to prevent China from acquiring these components through intermediaries in these countries.
Despite these efforts, the smuggling of Nvidia’s chips to China continued, highlighting the challenges faced by the U.S. in controlling the flow of advanced technology to China.
Last week, Nvidia CEO Jensen Huang revealed that the Trump administration would resume allowing the sale of the company’s China-specific H20 chip.
The news also follows Huang’s recent high-profile visit to China, where he was hailed as a rockstar and received a warm reception.
Huang’s visit was seen as a sign of Nvidia’s commitment to the Chinese market despite ongoing trade tensions between the U.S. and China.
Benzinga’s Edge Rankings place Nvidia in the 85th percentile for momentum and the 99th percentile for growth, reflecting its strong performance in both areas. Check the detailed report here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.