Nvidia’s (NASDAQ:NVDA) AI chips worth $1B were shipped to China in the three months after U.S. President Donald Trump tightened chip export controls, the Financial Times reported.
An analysis of dozens of sales contracts, company filings and several people familiar with the deals revealed that Nvidia’s B200 has become the most sought-after and widely available chip in the Chinese black market for U.S. semiconductors, the report added. The chip is banned for sale to China.
“Trying to cobble together datacenters from smuggled products is a losing proposition, both technically and economically. Datacenters require service and support, which we provide only to authorized NVIDIA products,” said an Nvidia spokesperson in an email to Seeking Alpha.
In May, several Chinese distributors began selling B200s to suppliers of data centers which serve China-based AI groups, the report noted. This was shortly after the Trump administration moved to hinder sales of Nvidia’s H20, a less-powerful Nvidia chip customized to comply with Biden administration -era curbs.
It is legal to get and sell restricted Nvidia chips in China, if relevant border tariffs are paid, as per lawyers with knowledge of the rules. However, entities selling and sending them to China would be violating U.S. rules, according to the report.
Last week, Huang that the company would boost supply of Chinese-compliant H20 chips in the coming months and look to bring more advanced semiconductors to the country. He added that demand for H20 chips from Chinese customers was high but no purchase orders have been fulfilled as it was waiting for U.S. approval of export licenses.
Huang’s comments had come after the company said it hoped to resume sales of its H20 graphics processing units, or GPUs, to Chinese clients, citing U.S. government assurances that export licenses will be granted. U.S. Commerce Secretary Howard Lutnick said the move was part of negotiations on rare earth minerals.
The sale of the H20 chips had been halted in April despite the chips being designed to bypass export restrictions.
In the three months that followed, Chinese distributors from Guangdong, Zhejiang and Anhui provinces sold Nvidia’s B200s, and other restricted processors like H100 and H200, the report noted.
The total sales during this period was expected to be about $1bn, the report added.
Nvidia told the news outlet that it has long insisted there is “no evidence of any AI chip diversion”. There is no evidence that Nvidia is involved in, or has knowledge of, its restricted products being sold to China, the report noted.
One Anhui-based company whose name translates to “Gate of the Era” is one of the largest sellers of B200s, as per documents seen by the FT, the report added.
The chips were sold in ready-built racks, each one containing eight B200s and other parts and software required to plug straight into a data center.
The current market price ranges between RMB 3M to RMB 3.5M (about $489,000) per rack, down from the more than RMB 4M in mid-May when they first became available in China in large quantities, the report added.
Since mid-May, Gate of the Era got at least two shipments of a few hundred B200 racks each. They sold them directly — or indirectly through secondary distributors — to several data center suppliers and other companies. Gate of the Era and its affiliates are expected to have sold nearly $400M of such products, the report noted.
Gate of the Era lists an AI solution provider China Century, or Huajiyuan in Chinese, as its largest shareholder, as per company registration files, the report noted.
Also headquartered in Shanghai, China Century states on its website it has a lab in Silicon Valley and a supply chain center in Singapore, the report added.
“We have not procured Nvidia’s chips. We do not have any related [Nvidia chip] business,” said China Century to FT, adding that it did “smart city work.”
The B200 racks sold by Gate of the Era, as well as other Chinese distributors, over the past months were originally from American company Super Micro Computer (NASDAQ:SMCI), the report noted.
There is no suggestion that Supermicro is involved in or has knowledge of its products being smuggled into China. Super Micro said it “complies with all US export control requirements on the sale and export of GPU systems,” the report added.
Some Chinese distributors openly market products such as Super Micro’s B200 racks on social media that show photos of packages with the company’s logo, but it has not been verified if the sales have been completed, the report noted.
Besides B200, several other restricted Nvidia chips like H200, H100 and 5090 are being advertised openly on Chinese social media platforms such as Douyin and Xiaohongshu, according to the report.
Packaging and installation pictures and videos seen by the FT show product logos of companies such as Super Micro, Dell (NYSE:DELL) and Asus, infrastructure providers who assemble Nvidia’s chips into servers. There is no suggestion these companies are aware of the social media advertising or their products being sold in China, the report added.
Dell and Asus said they maintained rigorous and strict compliance to all laws and regulations, including U.S. export controls, and took action against partners who failed to comply, the report noted.
Dell and Asus did not immediately respond to a request for comment from Seeking Alpha.
Some Chinese distributors have even begun advertising for their future stock of B300s, Nvidia’s upgrade from the B200, which is expected to enter mass production in the fourth quarter of this year.