China Snags $1B+ in Nvidia AI Chips Despite US Export Controls—Here’s How

Silicon smugglers strike again. Despite Washington's best efforts to throttle China's AI ambitions, over $1 billion worth of Nvidia's cutting-edge chips slipped through the cracks in 2024. The underground tech pipeline proves harder to shut down than a crypto exchange during a bull run.

The Great AI Chip Heist

Export controls? More like export suggestions. While US regulators pat themselves on the back for 'protecting national security,' Nvidia's H100s keep finding their way to Chinese labs—probably wrapped in 'not for military use' pinky promises.

Creative Compliance 101

Through a mix of third-party intermediaries, shell companies, and good old-fashioned creative accounting, China's tech sector keeps its AI factories humming. Because nothing says 'free market' like playing hide-and-seek with $10,000 GPUs.

The semiconductor shell game continues—because when there's a will (and a billion dollars), there's always a loophole. Meanwhile, Wall Street analysts downgrade Nvidia stock over 'regulatory risks' while quietly loading up on calls. Typical.

Nvidia says there’s no evidence of AI chip diversion

Nvidia maintains it has “no evidence of any AI chip diversion” and says it neither knows of nor takes part in any unauthorized sales into China. The company said that establishing data centers using smuggled chips is a losing case, economically and technically.

Nvidia also noted that its service and support are available only to authorized products. Anhui-based “Gate of the Era” has emerged as one of the biggest B200 resellers, the Financial Times said. 

Founded in February amid rumors that Trump would bar H20 exports to China, Gate of the Era is owned by another Shanghai‑registered group of the same name. The firm assembles chips into ready‑to‑use racks, each holding eight B200s plus the power, cooling units and software for plugging directly into data centers.

A rack, roughly sized to a suitcase and weighing about 150 kg with packaging, now sells for between Rmb 3 million and Rmb 3.5 million (about $489,000), down from over Rmb 4 million when they first appeared in China in mid‑May. Even at the lower price, that is nearly a 50% markup on comparable US rates.

One Chinese distributor received several hundred racks of chips

According to the insiders, Gate of the Era received two shipments, at the very least, consisting of several hundred racks each, since mid‑May. The company then sold them either directly or through smaller middlemen to data center operators and other buyers. In total, its B200 rack sales are thought to be close to $400 million.

Company records list China Century, also known as Huajiyuan, as Gate of the Era’s largest shareholder. That Shanghai‑based AI solutions provider claims on its website to run a Silicon Valley lab and a supply center in Singapore, using data to establish “the new century of a smart China.” 

It says it has a large number of business partners, over 100, and names AliCloud, ByteDance’s Huoshan Cloud and Baidu Cloud as “trusted partners.” After being contacted by the Financial Times, Huoshan Cloud’s logo was removed from China Century’s site. 

A China Century spokesperson told the FT it did “smart city work” but had not bought Nvidia chips and had no chip‑related business.

Industry insiders, along with product specs and packaging photos seen by Financial Times, point to Supermicro, an American assembler of chip systems, as the original source for the B200 racks that were sold in China.

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