Nvidia’s Secret Black Market: Chips Sold Illegally in China – Here’s How They’re Doing It

On Tuesday, the Wall Street Journal reported that Nvidia’s advanced semiconductors, crucial for artificial intelligence (AI) development, are being widely distributed in China through the black market. Some entities are reportedly even selling entire servers equipped with these chips.

Despite Biden’s Export Restrictions, Nvidia Chips Are Being Sold Brazenly in China

The WSJ detailed that despite U.S. restrictions on exporting Nvidia’s advanced semiconductors, over 70 companies were found advertising these chips for sale online. They listed prices ranging from $10,000 to $25,000, significantly above the regular market price.

The WSJ contacted 25 companies currently selling Nvidia’s semiconductors; many claimed they could supply dozens of them monthly. When asked about the distribution route, one company associate responded, “There’s always a way.” The WSJ reported that most companies promised delivery within a few weeks of an order, and some are even selling whole servers equipped with eight semiconductors with stable underground networking systems. WSJ additionally disclosed that the supply seems sufficient to meet the needs of startups and research institutions.

The WSJ also suggested that distribution companies might only post ads without inventory or sell modified older versions of Nvidia semiconductors.

The Reason Why a Trafficking College Student Passed Through Singapore Airport Unhindered

The media reported that Nvidia does not sell semiconductors directly to AI companies but distributes them in AI servers or AI systems through Dell Technologies and Super Micro Computer. As a result, tracking would be challenging If these companies’ spare chips were distributed.

Citing legal opinions, the WSJ analyzed that if Nvidia semiconductors are smuggled through a third country, there is ample room to evade U.S. regulations. Last year, a Chinese student smuggled six Nvidia semiconductor chips from Singapore at $100 each without any restraint at Singapore airport since local export regulations do not apply to technical parts.

The person who instructed the student to smuggle was a broker known as Brother Jiang, famous in the black market. In an interview, Brother Jiang revealed to the WSJ that he had evaded U.S. sanctions via Singapore, Malaysia, Vietnam, and Taiwan. The student stated in the WSJ interview, “I’m happy to be able to do something for my country. Why wouldn’t I do it if I can earn a little extra income?”

Dell, Super Micro Computer, and Nvidia clarified that they comply with the Biden administration’s export restrictions and will take immediate action if illegal activities are detected.