➢ Key Points:
- Over $1 billion worth of banned Nvidia AI chips have been smuggled into China since April 2025.
- A booming underground repair industry in China supports restricted GPUs like the H100 and A100.
- Nvidia faces growing tension between U.S. export controls and its business relations in China.
Despite strict U.S. export controls, more than $1 billion worth of advanced Nvidia’s AI chips have reportedly entered China through unauthorized channels since April 2025. Flagship models such as the H100, H200, and B200—banned from official export under U.S. national security restrictions—are being sold covertly to Chinese data center operators, according to a Financial Times report.
These high-performance GPUs have made their way into China via Southeast Asian markets and local distributors, despite U.S. efforts to choke off China’s access to cutting-edge semiconductor technology. Server racks containing up to eight B200 GPUs are being sold in China at markups of nearly 50%, fetching prices as high as 3.5 million yuan per rack.
This unauthorized influx poses a direct challenge to U.S. enforcement and underscores the deep demand in China for state-of-the-art Nvidia AI chips computing power to develop large language models and other advanced technologies.
Repair Industry Thrives on Banned Nvidia Hardware
With these chips now embedded in Chinese infrastructure, a booming repair ecosystem has emerged to support them. At least a dozen Shenzhen-based firms have shifted operations to specialize in repairing banned Nvidia models such as the A100 and H100, which have been officially unavailable in China since 2022, according to Reuters.
One company, which entered the AI repair business just last year, now services up to 500 chips per month, charging 10,000 to 20,000 yuan ($1,400–2,800) per unit. These facilities simulate full-scale data centers—testing chips in environments with up to 256 servers—to ensure stability and performance after repairs.
This underground service sector has become vital as Chinese AI firms prefer high-powered chips like the H100 over legal but less capable alternatives such as Nvidia AI chips export-compliant H20 GPU. While repair work isn’t illegal under Chinese law, companies operate discreetly to avoid international scrutiny. Nvidia has publicly stated it does not service or support restricted chips in China.
Nvidia Navigates Diplomatic and Strategic Tightrope
Amid the mounting controversy, Nvidia CEO Jensen Huang has made multiple high-profile visits to China in 2025, seeking to balance diplomatic goodwill with regulatory compliance. During his most recent trip, Huang met with top Chinese officials, including Commerce Minister Wang Wentao and Vice Premier He Lifeng, to discuss investment and AI collaboration, as reported by Reuters.
While praising Chinese AI leaders like Tencent and Alibaba for their world-class models, Huang also introduced new export-compliant chips such as the RTX Pro, targeting industrial AI use in smart factories and robotics. However, production of even these compliant chips has faced setbacks: Nvidia recently canceled H20 orders with TSMC, and restarting chip manufacturing could take up to nine months.
Analysts warn that despite Nvidia’s CUDA ecosystem giving it a software edge, the ongoing export curbs may accelerate China’s push for self-reliance in AI hardware, especially with state-backed players like Huawei stepping up to fill the void.
The smuggling of over $1 billion in Nvidia AI chips into China underscores the limitations of current export controls and the insatiable demand for cutting-edge AI hardware. As a parallel repair economy flourishes and diplomatic efforts continue, Nvidia finds itself navigating a complex landscape of geopolitics, business opportunity, and technological supremacy. Meanwhile, China’s ambitions in AI remain undeterred—powered in part by black market silicon and a growing domestic ecosystem ready to capitalize on it.
