Nvidia on Thursday called data centers built using smuggled chips a “losing proposition,” emphasizing it does not support unauthorized products. The statement follows a report from the Financial Times revealing that at least $1 billion worth of Nvidia’s AI chips have entered China illegally.
“Trying to cobble together datacenters from smuggled products is a losing proposition, both technically and economically,” a Nvidia spokesperson told CNBC. “Datacenters require service and support, which we provide only to authorized NVIDIA products.”
The Black Market Surge Amid Export Restrictions
According to the FT, Nvidia’s B200 chips—banned from sale to China—have gained traction on the black market despite U.S. export controls. Chinese distributors started selling these chips in May to data center suppliers serving Chinese AI groups, according to sales contracts and company documents cited in the report.
The U.S. has imposed these restrictions due to national security concerns, amid an ongoing technological rivalry with China for AI dominance. While China remains a vital market for chipmakers, many advanced processors have been blocked from sale there.
Nvidia’s Regulatory Breakthrough and Future Ambitions
Last week, Nvidia CEO Jensen Huang announced plans to resume sales of its H20 chips to China after reaching a regulatory breakthrough with the Trump administration. The U.S. had halted these sales in April by requiring an export license for the chip designed to circumvent prior restrictions.
Huang has expressed interest in eventually selling even more advanced chips to China, signaling an ongoing negotiation and balancing act between business interests and geopolitical concerns.
What The Author Thinks
While export controls aim to protect national security, the widespread presence of smuggled chips highlights the difficulty of policing high-tech flows in a globalized market. Nvidia’s warning underscores the risks companies face when unauthorized hardware is used without support, but governments must also recognize that unilateral restrictions may encourage black markets rather than prevent technological transfer.
Featured image credit: Roboflow Universe
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