TLDR
- Advanced Nvidia B200 AI chips worth $1.1 billion were smuggled into China despite export bans
- Chinese distributors in multiple provinces are selling restricted H100, H200, and B200 processors on black markets
- Southeast Asian countries like Thailand serve as key transit hubs for acquiring banned chips
- Nvidia CEO Jensen Huang sold $38.7 million worth of shares in a prearranged trading plan
- US Commerce Department considers new export controls on AI products to countries like Thailand
Chinese distributors have successfully smuggled advanced Nvidia AI chips worth at least $1.1 billion into the country. This comes despite strict export controls implemented by the Trump Administration.
The Financial Times reviewed sales contracts and company documents that reveal the scope of this black market operation. Chinese distributors in Guangdong, Zhejiang, and Anhui provinces are openly selling banned B200 processors.
These same distributors also offer other restricted chips including Nvidia’s H100 and H200 models. All of these processors are designed specifically for advanced artificial intelligence applications.
The smuggling operation has been active since May 2024. Chinese distributors began selling B200 chips directly to data center providers during this period.
These data centers service major Chinese AI companies that cannot legally purchase the chips. The black market has created a workaround for China’s tech sector.
Nvidia maintains there is no evidence of chip diversion from authorized channels. The company told Reuters that building data centers with smuggled products is inefficient.
The chipmaker only provides technical support for products sold through authorized distributors. This creates additional challenges for Chinese companies using black market chips.
Southeast Asia Becomes Transit Hub
Southeast Asian countries have emerged as critical transit points for this smuggling operation. Thailand has become a particularly important hub according to industry experts.
Chinese groups use these countries to acquire restricted chips before moving them across the border. The strategy helps circumvent direct export restrictions from the United States.
The US Commerce Department is now considering new export controls targeting these transit countries. New measures specifically targeting Thailand could take effect as early as September.
Recent Trading Activity
Nvidia CEO Jensen Huang sold 225,000 shares on July 18 for $172.05 each. The transaction generated approximately $38.7 million in proceeds.
The sale represents about 0.03% of Huang’s total holdings in the company. He still owns more than 857 million shares including 74.3 million under beneficial ownership.
The stock gained 0.21% following the disclosure of Huang’s sale. This transaction appears to be part of a prearranged trading plan.
Market Performance Context
Nvidia shares have rallied 75% over the past three months. The surge pushed the company’s market capitalization above $4 trillion earlier this month.
The rally accelerated after news broke that Nvidia could resume H20 chip sales to China. The Trump Administration repealed previous restrictions on these specific processors.
Last week Nvidia announced it would be allowed to resume sales to China. This development came after the administration lifted restrictions on H2O chip exports.
The company continues to benefit from strong demand in the AI chip market. Data center providers worldwide are competing for access to Nvidia’s most advanced processors.
According to the Financial Times investigation, several people with direct knowledge confirmed the smuggling deals. The black market operation demonstrates the high demand for Nvidia’s AI chips in China despite export restrictions.
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