A recent Financial Times investigation confirms that more than $1 billion worth of NVIDIA’s high-end GPUs—including Blackwell B200, H100, and H200 models—have been illegally smuggled into China in the three months following tightened U.S. export controls under former President Trump
These restricted GPUs were sold through black‑market channels by distributors in provinces like Guangdong, Zhejiang, and Anhui, often assembled into server racks with branding from Supermicro, Dell, and Asus—none of which the companies acknowledge participating in the scheme
How the Smuggling Network Operates
Smugglers reportedly use Southeast Asian transit hubs—such as Singapore, Malaysia, and Thailand—to mask the ultimate destination of restricted GPUs, selling them covertly to Chinese AI firms and data centers seeking high-performance chips
In one notable case, Singapore authorities arrested individuals accused of re-exporting NVIDIA hardware to China’s AI startup DeepSeek, bypassing trade controls via falsified destination claims
Market Behavior & Driver of Demand
Chinese distributors publicly advertise B200 and other banned GPUs on platforms like Douyin and Xiaohongshu, touting “plug-and-use” racks available for immediate pickup even though they operate in a legal gray zone
One major distributor reportedly sold nearly $400 million in B200 systems, often pricing them at roughly $500,000 per rack, a 50% premium compared to U.S. rack prices, giving further assurance of profitability despite risk
Risks for Infra Builders & Industry Impact
NVIDIA has rejected any involvement in these illicit transactions, warning that unauthorized use of smuggled GPUs is unsustainable, lacking official service and support, and can lead to performance degradation and technical issues in AI data centers
Meanwhile, the smuggling of restricted hardware exposes vulnerabilities in U.S. export control strategies. Researchers warn that hardware-centric bans are porous—prompting calls for chip-level tracking laws to prevent diversion post-sale
Strategic and Security Implications
As China aggressively expands its AI infrastructure—with plans to build AI data centers housing over 115,000 restricted GPUs across provinces like Xinjiang and Qinghai—U.S. lawmakers are increasingly concerned about national security implications of unchecked chip access
In response, U.S. legislators are proposing policies such as firmware-based chip tracking and enhanced licensing rules to better enforce export restrictions and curb the illegal trade of high-performance chips The Times of India.
Summary
China-based distributors have managed to channel over $1 billion in NVIDIA GPUs—including the controversial B200, H100, and H200 models—into mainland markets through illicit networks following export control mandates.
Leveraging Southeast Asia as transshipment zones and exploiting compliance loopholes, these operations underline the complexity of containing high-end AI hardware.
As China continues to deepen its AI ambitions, regulatory gaps are prompting U.S. policymakers to seek stronger oversight mechanisms and enhanced enforcement tools.
