China scores Nvidia AI chips worth $1 billion despite US export ban

Nvidia’s banned AI chips are reportedly powering Chinese data centers via black markets, prompting U.S. concerns over enforcement gaps and possible plans to tighten export controls further, including to countries like Thailand by September

Despite tightened U.S. export controls, Nvidia's high-performance AI chips valued at over $1 billion reportedly entered China through unauthorized channels over the past three months. The illicit trade, centered around Nvidia's restricted B200 processors, highlights the growing challenge of enforcing technology bans amid soaring demand for advanced AI infrastructure.

According to reports quoting sources with direct knowledge of the matter, Chinese distributors from provinces such as Guangdong, Zhejiang, and Anhui facilitated the sale of banned B200, H100, and H200 chips to local data center suppliers. These processors, crucial for AI model training and deployment, have been restricted under recent U.S. regulations aimed at curbing China’s access to cutting-edge semiconductors.

The chips have surfaced in Chinese black markets and are reportedly being used to build domestic AI data centers, raising concerns over regulatory loopholes. Nvidia, in a statement, emphasized that data centers using unauthorized chips operate inefficiently, as the company only supports officially sanctioned hardware.

Smuggling sparks policy review

The surge in unauthorized shipments comes as U.S.-China tech tensions intensify, with both nations vying for leadership in artificial intelligence and advanced computing. The U.S. Department of Commerce and the White House have not commented on the reported smuggling activities. Meanwhile, Southeast Asia has emerged as a critical region in this gray-market supply chain, where restricted chips are reportedly routed before reaching Chinese buyers.

Industry experts suggest that these developments could prompt Washington to impose additional controls. Reports indicate that the U.S. government is considering extending export restrictions to countries like Thailand as early as September, in an effort to stem circumvention of current policies.

Earlier this month, Nvidia received a partial reprieve when U.S. authorities allowed resumed sales of the H20 chip in China, reversing a prior ban. However, the broader export restrictions remain in force, making enforcement and compliance increasingly complex for companies operating across global tech markets.