Nvidia’s banned AI chips double in price on China’s black market

{"text":[[{"start":8.75,"text":"Nvidia’s AI chips have more than doubled in price on China’s black market as a US crackdown on illicit exports collides with strong demand from Chinese companies."}],[{"start":18.8,"text":"The price of the US tech giant’s flagship DGX B300 server has soared to more than Rmb8mn ($1.1mn) over the past six months, up from Rmb4mn, according to FT interviews with multiple Chinese chip traders. The system, which contains eight Blackwell graphics processing units, typically retails in the US at about $400,000."}],[{"start":41.05,"text":"Nvidia’s RTX 6000 Pro workstation chip, a popular option for start-ups deploying large language models, has risen in cost from about Rmb50,000 at the start of the year to as much as Rmb130,000, according to traders. The RTX 6000 and DGX B300 are barred from export to China under Washington’s chip controls."}],[{"start":65,"text":"The price rises underline how Washington’s latest clampdown has squeezed the black-market routes used to move restricted chips into China, while also showing that demand for Nvidia’s processors remains strong despite Beijing’s push to replace them with domestic alternatives."}],[{"start":80.2,"text":"“The loopholes have shrunk. It is becoming more and more risky for intermediaries to trade these chips as prices have surged,” said one trader who sells to large data centre clients. "}],[{"start":null,"text":"

"}],[{"start":91.35000000000001,"text":"Traders told the FT that supplies were particularly disrupted after US authorities stepped up their investigations into illicit chip exports at the end of last year."}],[{"start":102.55000000000001,"text":"In March, a Supermicro co-founder was charged, alongside a Taiwan-based employee and a contractor, with smuggling $2.5bn of Nvidia’s AI servers to Chinese customers in the largest case by US law enforcement relating to AI chip exports."}],[{"start":118.70000000000002,"text":"Supermicro was not named as a defendant in the indictment. At the time the company said it “maintains a robust compliance programme and is committed to full adherence to all applicable US export and re-export control laws and regulations”."}],[{"start":132.9,"text":"Taiwanese and Malaysian authorities have also begun to investigate chip smuggling operations, seeking to crack down on popular routes for re-export to China. Sellers said the heightened scrutiny had made it harder to secure supplies."}],[{"start":146.25,"text":"Nvidia said trying to “cobble together” data centres from smuggled products is a “dead-end”."}],[{"start":151.65,"text":"“AI data centres are massive and complex — building out of contraband is extremely difficult and we do not provide any support or repairs for restricted products. Our compliance efforts have repeatedly stopped would-be smugglers, who risk prosecution on both sides of the globe,” it added."}],[{"start":170.1,"text":"Chinese authorities have also tightened scrutiny of Nvidia’s products entering the country, including the H20 and H200, as Beijing seeks to accelerate the adoption of domestic alternatives from companies such as Huawei."}],[{"start":182.4,"text":"The FT last month reported Chinese authorities had added a China-specific Nvidia gaming chip to the list of banned products for import."}],[{"start":null,"text":""}],[{"start":191.05,"text":"Chinese tech companies are racing to commercialise AI applications and autonomous agents, fuelling demand for “inference” chips that can serve large numbers of users rather than train frontier models. "}],[{"start":203.5,"text":"But supply constraints and lagging software mean there are limited domestic options to meet this need. Huawei has recently released its Ascend 950PR, its flagship AI processor, which is undergoing testing by large data centre clients and has been positioned as the hardware of choice for domestic companies running inference."}],[{"start":225.4,"text":"Several traders said Chinese customers were increasingly buying a wider range of Nvidia hardware, including gaming processors that can be modified to run AI workloads and older generations of data centre equipment such as the A100 accelerator to work around the shortages."}],[{"start":242.35,"text":"“Stocks of A100s are selling out very quickly. Companies don’t have a choice but to buy the old ones,” said one trader. Prices for servers containing A100 chips have risen from about Rmb200,000 at the end of last year to as much as Rmb600,000."}],[{"start":261.1,"text":"One trader said the restrictions on H200 had significantly worsened shortages because the product had previously been available in relatively large quantities inside China. Washington has approved licences for H200 for some Chinese companies after President Donald Trump greenlighted their sale to that country. But Chinese customs authorities have been instructed not to permit imports of the chip to support domestic champions."}],[{"start":287.8,"text":"Several traders said H200 processors could still be obtained, but buyers typically had to complete transactions in Hong Kong before arranging informal transport into mainland China. "}],[{"start":299.2,"text":"One method involved installing restricted chips inside servers that were otherwise permitted for import, although traders said the practice carried substantial risks."}],[{"start":308.59999999999997,"text":"“No one dares to do this at scale. You can go against the American rules, but not the Chinese,” said one trader."}],[{"start":316.29999999999995,"text":"Chinese brokers typically pay deposits to secure servers overseas before arranging transport into mainland China, often via Hong Kong. Traders said the tightening environment had increased costs and encouraged fraudulent activity, with some brokers taking deposits despite lacking access to inventory."}],[{"start":334.34999999999997,"text":"The tightening supply of Nvidia hardware has also pushed up the cost of renting AI computing capacity. Two years ago, GPU rental prices in China were generally lower than in the US, reflecting the widespread availability of smuggled Nvidia processors."}],[{"start":350.4,"text":"An FT survey of major cloud and GPU rental platforms in both countries found prices in China are comparable to, and in some cases higher than, those in the US, particularly for systems based on Nvidia’s latest Blackwell chips."}],[{"start":366.2,"text":"One seller said the spiralling costs had been exacerbated by surging memory chip prices, which have made diversifying into other lines of business difficult. "}],[{"start":376.34999999999997,"text":"“Prices of all products have skyrocketed. Many people have reduced their demand at these prices. It’s been a difficult year,” he said. "}],[{"start":392.24999999999994,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1782288082_2994.mp3"}