In late 2022, the US implemented export restrictions on high-end GPU models, such as Nvidia A100 and H100, to China.
These measures were intended to prevent US technology from advancing China's military capabilities and supercomputing infrastructure, and in response, Nvidia developed the A800 and H800 models with reduced capabilities to comply with these export controls.
In 2023, amid concerns that even these watered-down models could contribute significantly to Chinese technological and military advances, contrary to U.S. national security interests, the restrictions were expanded to include these newer models. The crackdown continues even now, with tighter controls on quantum computing and semiconductor products added to the list this month.
The secondary market in China causes problems
Despite these measures, a Financial time An FT report claimed that Nvidia’s high-end AI GPUs are widely available for rent in China and are cheaper than in the US, and that the price disparity is largely due to a robust black market in China that circumvents US export controls.
He FOOTThe firm’s investigation revealed that small Chinese cloud service providers are offering Nvidia A100 servers at prices up to 40% lower than their American counterparts. It identified four Chinese vendors charging around $6 per hour for servers with 8-way Nvidia A100 GPUs, compared with $10 per hour in the US. This indicates not only a widespread smuggling operation, but also a thriving resale market within China.
According to the report, these GPUs are sold openly on Chinese platforms such as Taobao and Xiaohongshu, and physically in marketplaces such as Shenzhen’s Huaqiangbei, often at prices slightly higher than those outside China. Common tactics include erasing the GPUs’ serial numbers to evade detection, undermining US efforts to control the use of its cutting-edge technology.
Larger Chinese companies like Alibaba and ByteDance, which focus on compliance, charge much higher rates (similar to Amazon Web Services, which range from $15 to $32 per hour), suggesting they avoid using bootleg GPUs to maintain the integrity of their business.
While Nvidia is working hard to comply with U.S. export laws through its partnerships, tracking second-hand sales of its products remains a major challenge. This difficulty underscores the complexities of managing black markets that operate outside international regulations.
