Nvidia AI Chips Getting Sold In China's Underground Market Amid US Sanctions: Reuters

Despite U.S. sanctions, high-end Nvidia Corp. NVDA AI chips are being sold in China’s underground market, Reuters reports.

Underground Market: At the Huaqiangbei electronics area in Shenzhen, vendors discreetly offer Nvidia’s A100 artificial intelligence chips for $20,000 apiece, double the usual price.

The U.S. export restrictions have created a de facto underground market, with vendors keen to avoid scrutiny from both U.S. and Chinese authorities.

Impact of Sanctions: President Joe Biden’s administration ordered Nvidia to stop exporting its two most advanced chips, the A100 and the recently developed H100, to mainland China and Hong Kong in September. This was part of efforts to stymie Chinese AI and supercomputing development amid intensifying political and trade tensions.

High Demand: Despite the sanctions, demand for high-end chips has skyrocketed, particularly for Nvidia’s microprocessors, which are widely regarded as the best at handling machine-learning tasks. Buyers typically include app developers, startups, researchers, gamers, and even local Chinese authorities.

Response from Nvidia and U.S. Department of Commerce: Nvidia stated that it did not allow exports of the A100 or H100 to China and would take immediate action if a customer was found to be breaching their agreement.

The U.S. Department of Commerce stated that export control measures have had a “substantial impact” on China’s availability of high-end chips and that “allegations of violations are investigated”.