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Nvidia has issued a stark warning following revelations that over $1 billion worth of its advanced AI chips have entered China through unauthorized channels.
Responding to a Financial Times investigation, Nvidia stated on Thursday that "datacenters built with smuggled products are a losing proposition, both technically and economically." The company emphasized it only provides service and support for authorized Nvidia hardware, underscoring the limitations and inefficiencies of illicit deployment.
The report indicates that after the U.S. imposed new export restrictions in April, Chinese distributors began sourcing high-performance chips like the B200, H100, and H200 from Southeast Asian intermediaries. These chips, prohibited for sale in China due to national security concerns, are now circulating widely on China's black market, according to sales records and insiders cited by the FT.
Nvidia's B200 chip, in particular, has become a hot commodity. Despite the U.S. embargo, distributors in Guangdong, Zhejiang, and Anhui reportedly moved large volumes to AI-linked datacenter operators across China. Industry sources also flagged Thailand and other Southeast Asian nations as key hubs in this parallel trade.
Last week, Nvidia CEO Jensen Huang signaled a partial breakthrough with the Trump administration, announcing that sales of the H20 chip, designed to comply with earlier export controls, would resume. However, Huang has been open about his desire to bring more advanced processors back to the Chinese market.
The U.S. Department of Commerce is reportedly considering expanded export controls on AI hardware to countries like Thailand as early as September, aiming to tighten enforcement around strategic technology transfers. While Nvidia remains at the forefront of global AI development, the illegal trafficking of its chips highlights the fragility of U.S. tech policy enforcement and the complexity of navigating cross-border competition. As Huang warned recently, "Trying to bypass regulation may win the moment, but it will lose the future."
