In a surprising twist, despite strict U.S. export restrictions, Nvidia’s powerful AI chips—the A100 and H100—are readily available in China, often at significantly lower prices than in the United States. An investigation by The Financial Times uncovered that small Chinese cloud providers are offering servers packed with eight Nvidia A100 chips for just $6 an hour. In comparison, similar services in the U.S. cost upwards of $10 an hour or more.

Image source: Mariia Shalabaieva/Unsplash

This price discrepancy highlights the widespread availability of Nvidia chips in China and the loopholes that companies exploit to bypass U.S. sanctions designed to restrict access to cutting-edge technology. These chips, essential for training large language models (LLMs) and other AI-driven applications, continue to be accessible to Chinese startups and resellers despite official restrictions on the A100 and a lack of permissions for the H100.

Interestingly, while smaller cloud operators offer bargain prices, big players like Alibaba and ByteDance charge two to three times as much for the same services. Even after discounts, their rates align with Amazon Web Services (AWS) pricing, which ranges between $15 and $32 per hour. According to a startup founder, larger companies face compliance hurdles that prevent them from using smuggled chips, putting them at a disadvantage.

Experts estimate that over 100,000 Nvidia H100 chips are already circulating in China. Their compact size makes them easy to smuggle, undercutting Washington’s attempts to curb AI development in the country. A small Chinese cloud operator explained that low domestic costs for labor and electricity help offset the higher prices paid for black-market chips. “Engineers are cheap, and electricity is cheap…” he said, describing the conditions that enable smaller companies to offer lower rates.

Nvidia maintains that it primarily sells chips to authorized partners, ensuring compliance with U.S. export regulations. The company acknowledges the existence of a secondary market for its AI accelerators but has promised to take action against any detected violations of export controls.

However, enforcing these sanctions beyond U.S. borders remains a challenge. Experts warn that shell companies in third countries often obscure the final recipients of these chips, complicating efforts to track and regulate their distribution. As an American sanctions expert told The Financial Times, “It is difficult to fully enforce export controls outside the U.S.” While Washington aims to limit China’s access to advanced AI technology, Nvidia’s powerful chips continue to flow freely into the country, fueling its tech industry.

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