In October 2022, the Biden Administration announced that it would impose restrictions on the sale of new semiconductors to China, aiming to slow the progress of the Chinese tech sector.
This has meant firms like Huawei have had to become increasingly creative to get around the restrictions, but it’s not easy.
The US blocked the importation of advanced Nvidia GPUs to China to tighten control over critical AI technology and this has inadvertently ignited a thriving underground market there. Chinese buyers, undeterred by the sanctions, are employing remarkably ingenious tactics to smuggle in high-end Nvidia GPUs like the H100 and A100.
There is always a way
The Wall Street Journal (WSJ) reports some travelers are now hiding advanced Nvidia chips in their luggage. The outlet reviewed records, including customs filings, that showed Nvidia chips were being purchased by Chinese buyers in an underground market.
One Beijing distributor told WSJ reporters that he receives dozens of chips monthly, claiming “there is always a way” to get them into China. Another broker, acting as an intermediary, described using personal contacts at official distribution channels and system integrators in Southeast Asia to source the chips, omitting the model numbers on paperwork to evade detection.
In April 2024, Reuters reported Chinese universities and research institutes, including the Chinese Academy of Sciences and the Shandong Artificial Intelligence Institute, were able to acquire Nvidia chips through resellers.
While tighter regulations under the Advanced Computing Chips Rule aim to curb this flow, the blackmarket continues to thrive and adapt. As the tech arms race intensifies, both sides are employing increasingly sophisticated measures to outmaneuver each other in this high-stakes game of technological cat and mouse.