At least $1 billion worth of Nvidia’s restricted AI processors were sold into China in the past three months, according to a Financial Times investigation, highlighting how U.S. export controls are struggling to contain Beijing’s access to cutting-edge technology.
Despite a ban imposed under the Trump administration, Chinese distributors rapidly acquired and resold Nvidia’s B200 chips — the company’s most advanced processor — through black market channels. These chips, critical for training AI systems like those developed by OpenAI, Google, and Meta, are prohibited for sale to China, but documents and insider sources reviewed by the FT confirm widespread access within the country.
B200s Flood China Despite Sanctions
The U.S. government had hoped to curb China’s AI ambitions by tightening restrictions on chip exports, including the H100, H200, and most recently the H20. But Nvidia’s B200 has surged in popularity due to its performance and relatively easy integration into data centers.
Several Chinese distributors in provinces like Guangdong, Zhejiang, and Anhui have been selling B200s and other restricted processors in pre-assembled server racks, according to sales contracts and interviews with people directly involved in the deals.
Each rack contains eight B200 chips, weighs nearly 150kg, and costs RMB 3M–3.5M (roughly $489,000), representing a 50% markup over similar U.S. products. The total value of shipments between April and June surpassed $1 billion.
One company, Gate of the Era, is estimated to have sold $400 million worth of such products. Based in Anhui and owned by a Shanghai-based parent company, Gate of the Era was formed in February — just as rumors swirled about further U.S. curbs. They received at least two large shipments of B200 racks, which were then sold to data centers or resold by secondary distributors.
A Legal Grey Zone and Supply Chain Loopholes
While exporting restricted chips to China violates U.S. law, possession and resale within China is not illegal if import duties are paid. This legal grey area has enabled a surge in transactions, often facilitated through unofficial distribution networks.
Nvidia has publicly denied involvement, stating there is “no evidence of any AI chip diversion,” and emphasizing that service and support are available only to authorized customers.
U.S. companies whose components appear in these unauthorized servers — such as Supermicro, Dell, and Asus — also denied any connection and asserted their compliance with U.S. export laws. Social media videos from Chinese platforms like Douyin and Xiaohongshu have shown racks bearing these companies’ logos, advertised as “plug-and-play” AI servers.
“It’s like a seafood market,” said one distributor, referring to the chaotic, highly active trade in banned AI chips.
New Players and the ‘Smart China’ Push
Gate of the Era’s largest shareholder is China Century (Huajiyuan), a Shanghai-based AI company that boasts links to Silicon Valley and Singapore. The company lists prominent partners including AliCloud, Baidu Cloud, and ByteDance’s Huoshan Cloud, though some distanced themselves after FT inquiries.
China Century denies any Nvidia-related business, claiming to focus on smart city solutions. However, FT reporting shows its affiliates are deeply enmeshed in chip reselling operations.
Many of the sold B200 racks were originally assembled by Supermicro, a California-based firm that packages Nvidia chips into server infrastructure. Although there’s no evidence Supermicro is complicit, its systems have become a central piece in the Chinese AI black market.
Southeast Asia and Beyond: New Transit Routes
Industry experts say Southeast Asia has become a key stopover in the smuggling chain, with Thailand and Malaysia serving as rerouting hubs. The U.S. Department of Commerce is now reportedly weighing new export controls on countries suspected of being conduits for China-bound AI chips.
In response, Malaysia has already tightened regulations. Yet insiders say that when one channel closes, another opens — with Europe emerging as a new transit point for shipments.
“History has proven many times before that given the huge profit, arbitrators will always find a way,” said one Chinese distributor.
Demand Slows as H20 Curbs Ease — But Not for Long
Last week, Nvidia CEO Jensen Huang confirmed the Trump administration will resume allowing exports of the China-specific H20 chip — a less powerful model than B200. This has temporarily slowed black market B200 sales, but demand remains strong for top-tier chips like the GB200.
Distributors claim to have sold GB200 racks for RMB 40M ($5.6 million) each. The upcoming B300, expected to enter mass production later this year, is already being promoted online by Chinese vendors.
Compliance Divide: Who Buys Illegally?
Because smuggled chips are unsupported by Nvidia, major Chinese AI companies with global footprints largely avoid using them directly. Instead, third-party data centers act as intermediaries, providing compute capacity to smaller AI developers, financial firms, healthcare companies, and even entities on the U.S. entity list barred from legal purchases.
