Chinese Buyers Are Ordering Nvidia’s Newest AI Chips, Defying U.S. Curbs
Chinese buyers are navigating around U.S. export controls to acquire Nvidia’s latest artificial intelligence (AI) chips, highlighting the hurdles the Trump administration faces in restricting access to advanced American technology. This emerging trend demonstrates how traders in China are crafting a workaround, as they sell computing systems equipped with Nvidia’s Blackwell chips by utilizing third-party channels in neighboring regions.
Reports indicate that some resellers are even promising expedited delivery times—within six weeks—seemingly undeterred by U.S. restrictions. The recent orders for Nvidia’s chips signal a growing challenge for the administration, which has been trying to curtail China’s access to state-of-the-art semiconductor technology since implementing export controls in 2022. While the intent of these restrictions was to impede China’s advancements in AI, the rise of a covert network of brokers suggests their ineffectiveness in halting trade.
Circling Around Export Controls
As U.S. authorities attempt to stifle China’s access to powerful AI processors, a significant gray-market industry has emerged. Chinese resellers are using foreign entities registered outside of China to purchase Nvidia servers from locations such as Malaysia, Vietnam, and Taiwan. Vendors, like James Luo from Shenzhen, have reported taking sizable orders; for instance, in January, he secured a contract for over a dozen Blackwell servers valued at approximately $3 million.
The servers are acquired by companies that are licensed to sell Nvidia products, and after obtaining them for their own needs, they divert a portion to Chinese buyers. This divergence showcases a loophole in the export control regime, casting doubt on the effectiveness of existing regulations aimed at curbing the sale of high-tech chips to China.
Nvidia’s Struggle for Compliance
Nvidia has taken a proactive stance in response to these activities, pledging to investigate credible reports of potential diversion and to take appropriate measures. The company emphasizes that sophisticated AI equipment requires services and support that anonymous brokers simply cannot provide. Still, the reality is that Nvidia has reported significant sales of Blackwell processors, raking in $11 billion in sales during the quarter that ended in January—a figure that represents nearly 30% of the company’s total revenue.
A typical Blackwell server containing eight AI processors is reportedly priced at over $600,000 in China, indicating a marked premium compared to global prices. While the Blackwell chips are Nvidia’s flagship products, many of its older Hopper family processors remain under U.S. export controls, with the H200 chip being notably popular among Chinese buyers.
Market Dynamics Amid Export Controls
Despite U.S. restrictions, the larger market dynamics remain robust. Some of the products targeted for export controls are still making their way into China. For example, at least two Chinese universities are verified to have received AI servers outfitted with restricted Hopper chips as evidenced by official contracts. However, the opaque nature of procurement processes complicates a accurate assessment of the total trade in high-end AI chips.
The Biden administration’s attempts to tighten restrictions—including measures that would curtail AI chip purchases globally—are set to become more stringent. However, the future remains uncertain under the Trump administration, specifically regarding whether it will uphold these enhanced controls.
Building Sophisticated Networks for Trade
Since the initial Biden controls were enacted, a segment of entrepreneurs has developed various channels to facilitate the movement of chips into China. Originally reliant on human couriers transporting small quantities of chips, this effort has evolved into a more structured framework capable of handling complex logistics and documentation necessary for loading large servers with cutting-edge technology across borders.
Instead of functioning as individual transactions, these chips are more commonly sold as part of entire systems produced by major firms like Dell Technologies and Super Micro Computer. Both companies assert adherence to export controls and have signaled readiness to address any wrongful activities.
Challenges and Future Prospects
Even with successful acquisitions of Nvidia’s latest chips, Chinese entities may not attain an adequate supply to develop world-class AI systems. U.S.-based AI executives have asserted their needs for hundreds of thousands of chips—quantities that Chinese suppliers struggle to meet. Nevertheless, firms like DeepSeek have claimed they have been able to establish competitive AI models using fewer chips, suggesting a different approach to capability development in the Chinese tech landscape.
Overall, the ongoing orders from Chinese local cloud computing giants—including Alibaba, Tencent, and ByteDance—indicate a rising demand for Nvidia’s H20 chips—currently the most advanced chips not subject to American export controls. This trend signals just how critical advanced AI technology has become in not only enhancing capabilities but also in shaping competitive dynamics in the global tech arena.