Psst! Seeking Nvidia AI Chips in China? Just Ask Discreetly
In the midst of U.S. sanctions, where can a Chinese buyer get their hands on top-end Nvidia AI chips? Try visiting the famed Huaqiangbei electronics area in Shenzhen, specifically the SEG Plaza skyscraper. It’s packed with shops selling everything from camera parts to drones. While the chips aren’t advertised, asking discreetly can work wonders.
However, these coveted chips don’t come cheap. Two vendors, who spoke with Reuters on the condition of anonymity, said they could provide small numbers of A100 artificial intelligence chips, pricing them at a whopping $20,000 a piece – double the usual price.
Not Illegal, but Shrouded in Secrecy
While buying or selling high-end U.S. chips is not illegal in China, U.S. export restrictions have created a de facto underground market. Vendors are keen not to draw scrutiny from either U.S. or Chinese authorities.
In September, President Joe Biden’s administration ordered Nvidia to stop exporting its two most advanced chips – the A100 and the recently developed H100 chip – to mainland China and Hong Kong. This was part of efforts to stymie Chinese AI and supercomputing development amid intensifying political and trade tensions, followed by an array of semiconductor-related export controls.
Booming Demand Despite Restrictions
As AI booms across the globe after the runaway success of OpenAI’s ChatGPT, demand for high-end chips has skyrocketed. Nvidia’s microprocessors are widely regarded as the best at handling machine-learning tasks.
Ivan Lau, co-founder of Hong Kong’s Pantheon Lab, said he is trying to purchase 2-4 new A100 cards for the startup’s latest AI models. Vendors, who bought the chips outside the U.S., were quoting HK$150,000 ($19,150) per card, he said, adding: “They told us straight up that there will be no warranty or support.”
Reuters spoke with 10 vendors who described procuring small numbers of A100s. Their information highlighted both intense demand in China for the chips and the relative ease with which Washington’s sanctions can be circumvented for small-batch transactions.
Chip Buyers and Sellers
Buyers are typically app developers, startups, researchers, or gamers, the vendors said. One vendor even mentioned Chinese local authorities as buyers.
Nvidia stated that it doesn’t allow exports of the A100 or H100 chips to China. However, it does provide reduced-capability substitutes that comply with U.S. law.
“If we receive information that a customer is breaching their agreement with us and exporting restricted products in violation of the law, we would take immediate and appropriate action,”the statement said.
A Glimpse of the Future
The U.S. is likely not too bothered about small transactions of the chips, according to Charlie Chai, a Shanghai-based analyst at 86Research.
“Only if/when China poses a greater threat following significant catch-ups will we see more strict enforcement,”he said.
He added that the premiums currently commanded by Chinese vendors for A100 and H100 chips could collapse in the future, as many of the Chinese AI startups driving purchases would eventually withdraw from the market.