In late 2022, the US imposed restrictions on the export of high-end GPU models like the Nvidia A100 and H100 to China.
These measures were intended to prevent American technology from enhancing Chinese military capabilities and supercomputing infrastructure. In response, Nvidia developed the A800 and H800 models with reduced capabilities to comply with these export restrictions.
In 2023, driven by concerns that even these degraded models could significantly contribute to Chinese technological and military advancement, at odds with U.S. national security interests, the restrictions were expanded to include these newer models. The tightening continues even now, with tighter controls on quantum computing and semiconductor products added to the list this month.
China’s secondary market causes problems
Despite these measures, there is still a Financial Times According to a report from the FT, Nvidia’s high-end AI GPUs are widely available to rent in China and are cheaper than in the US. The price difference is largely due to a robust black market in China, which circumvents US export controls.
The FT‘s research revealed that small-scale Chinese cloud providers are offering Nvidia A100 servers at prices up to 40% lower than their U.S. counterparts. It identified four Chinese providers charging around $6 per hour for 8-way Nvidia A100 GPU servers, compared to around $10 per hour in the U.S. This not only points to a widespread smuggling operation, but also to a thriving resale market in China.
According to the report, these GPUs are being sold openly on Chinese platforms such as Taobao and Xiaohongshu, and physically in markets such as Shenzhen’s Huaqiangbei, often at slightly higher prices than those outside China. Common tactics include erasing GPU serial numbers to evade detection, undermining U.S. efforts to police the use of its cutting-edge technology.
Larger Chinese companies like Alibaba and ByteDance, which focus on regulatory compliance, charge much higher rates — comparable to Amazon Web Services, which ranges from $15 to $32 per hour — suggesting they are not using smuggled GPUs to maintain their corporate integrity.
While Nvidia works hard to comply with U.S. export laws through its partnerships, tracking secondhand sales of its products remains a significant challenge. This difficulty underscores the complexity of managing black markets that operate outside of international regulations.