Xi Jinping’s army, government sectors, as well as state-run artificial intelligence (AI) institutions and universities have managed to procure NVIDIA Corp (NASDAQ:NVDA) semiconductors. This is despite the U.S. export ban currently in place.

What Happened: Over the past year, various sectors have purchased Nvidia chips, which are currently under U.S. export restrictions. The transactions involved mostly anonymous Chinese entities, pointing out the difficulties Washington faces in completely cutting off China’s access to advanced U.S. chips, as per Reuters report.

The report revealed that numerous Chinese bodies have purchased and received Nvidia chips since the ban was imposed, including the A100 and H100 chips, which were banned from export to China and Hong Kong in September 2022, and the slower A800 and H800 chips that were also banned in October.

Despite the development of rival products by Huawei Technologies and other companies, the ongoing demand for Nvidia chips underscores a lack of suitable alternatives for Chinese businesses.

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Top universities and entities subject to U.S. export restrictions, such as the Harbin Institute of Technology and the University of Electronic Science and Technology of China, are among the buyers. These institutions have been accused of military involvement or affiliation against U.S. national interests.

Despite U.S. restrictions, an underground market for Nvidia chips has emerged in China, with vendors obtaining surplus stock from large shipments to U.S. companies or importing through entities in India, Taiwan, and Singapore.

Nvidia said it complies with all applicable export control laws and requires its customers to do the same. “If we learn that a customer has made an unlawful resale to third parties, we’ll take immediate and appropriate action,” a company spokesperson said.

Moreover, in December, U.S. Commerce Secretary Gina Raimondo announced that the U.S. government was scrutinizing three new AI accelerators being developed by Nvidia for the Chinese market.

Amid the challenges in China, Nvidia has been seeking expansion into other markets, like Vietnam. This strategy suggests a pivot towards other Asian markets could be a potential response to the ongoing challenges in China.

Photo via Wikimedia Commons