In the wake of U.S. sanctions, an underground market for high-end Nvidia AI chips has emerged in China, particularly in Shenzhen’s Huaqiangbei electronics area.
Vendors discreetly sell the A100 and H100 chips, which are in high demand despite being priced at double their usual cost.
The U.S. government, under President Joe Biden, imposed export restrictions on Nvidia’s advanced A100 and H100 chips in September, aiming to curb China’s AI and supercomputing advancements. This has led to a de facto underground market where vendors avoid drawing attention from authorities.
In Shenzhen’s SEG Plaza, vendors offer these chips at around $20,000 each, double the standard price. Buyers include app developers, startups, researchers, and even local authorities, highlighting the intense demand and ease of circumventing U.S. sanctions for small-batch transactions.
Nvidia has responded by providing reduced-capability substitutes like the A800 and H800, which are now being purchased by major Chinese tech firms such as Tencent and Alibaba.
However, the underground market persists, with vendors sourcing chips through excess stock from large U.S. firms or imports via companies in India, Taiwan, and Singapore.
Fraud is a concern in this market, with some vendors passing off refurbished chips as new A100s. The more advanced H100 chips, only available since March, are even harder to find. Despite the challenges, the demand for these chips remains high due to their superior performance in machine-learning tasks.
As AI technology continues to boom globally, the underground market for Nvidia’s high-end chips in China is likely to persist. Future enforcement of U.S. sanctions may tighten if China significantly advances its AI capabilities, potentially impacting the availability and pricing of these critical components.
