Smuggled Nvidia AI chips valued at $1 billion entered China over the past three months amidst stricter export controls, with certain companies boldly advertising their upcoming supply of B300 chips in defiance.
The U.S. export controls on advanced AI chips from Nvidia and AMD have faced challenges in preventing unauthorized sales to China. Despite stringent restrictions and bans introduced since 2022, significant quantities of banned Nvidia chips, including H20 GPUs and B200 models, have still reached Chinese markets.
The Trump administration's reversal of an earlier ban on Nvidia’s H20 chip sales to China in July 2025 as part of a trade deal involving rare earth minerals has transformed export controls from strict prohibitions into strategic trade tools. The H20 chip, intentionally designed for AI inference rather than training, still enables broad AI deployment but limits China’s ability to develop cutting-edge AI.
Smuggling and black markets have played a significant role in the circumvention of U.S. controls. Chinese companies have used smuggling routes and openly advertise banned Nvidia AI chips on Chinese social platforms. The Nvidia B200, the most powerful model, is the most sought-after AI chip in the black market, with demand skyrocketing after Trump's H20 ban.
Despite U.S. efforts, Chinese companies have obtained at least $1 billion worth of banned Nvidia and AMD chips since April 2025. Singapore has arrested three people involved in the smuggling of Nvidia's AI chips, and the country is considering blocking these sales to Malaysia and Thailand.
Nvidia and its affiliates do not sell these banned products to Chinese customers, but they are still being sold in China. The high demand and availability demonstrate substantial circumvention of U.S. controls. Some buyers continue to purchase the Nvidia B200 despite the U.S. ban, appreciating its performance. Sellers can make more than $100,000 for each sale of the B200 AI GPUs.
The U.S. does not provide service and support to these unauthorized AI chips, but their number in China indicates that buyers and sellers find a way to support them. One company, Gate of the Era, is estimated to have sold several hundred of these racks, with its gross sales almost reaching $400 million.
Jensen Huang, Nvidia's CEO, has downplayed the black market demand for Nvidia’s most powerful AI chips, while former U.S. Commerce Secretary Gina Raimondo has called these measures a fool's errand. Huang has stated that export controls are a failure and that these bans and sanctions encourage China to build its own hardware infrastructure.
The U.S. is pushing its allies to start cracking down on these smuggling operations. The going rate for one rack with eight B200 AI GPUs in China is around CNY 3 to 3.5 million, or about US$420,000 to US$490,000. As the U.S. continues to update and tighten export controls, the cat-and-mouse game between regulators and smugglers is expected to persist.
References: 1. Financial Times 2. Reuters 3. Bloomberg 4. The Verge
The financial implications of the ongoing situation concerning Nvidia's AI chips exported to China are significant, with Chinese companies estimated to have obtained at least $1 billion worth of banned Nvidia and AMD chips since April 2025 (Reuters). Moreover, the high demand for the Nvidia B200, the most powerful model, in the black market has led to sellers making more than $100,000 for each sale, indicating a profitable business venture (Bloomberg).
