Financial Times report suggests chip smugglers shifted an alleged $1 billion worth of Nvidia's AI chips to China over the course of 3 months while stricter US export controls were in effect

The Financial Times recently published an investigation into chip exports during an early three-month phase in the Trump administration, when export controls were being tightened to prevent the sale of high-powered US AI hardware to China. According to the FT, at least $1 billion worth of Nvidia GPUs were shipped to those sanctioned shores during this period, although the exact method of their entry is under dispute.

The FT says that it analysed "dozens of sales contracts, company filings, and multiple people with direct knowledge of the deals" in order to come to the conclusion that Nvidia's B200 AI GPU was the most widely available product in what it describes as a "rampant" Chinese black market, without Nvidia's apparent knowledge.

The investigation concludes that in the three month period prior to Trump's recent easing of restrictions on Nvidia chip exports, Chinese distributors from the Gungdong, Zhejiang and Anhui provinces allegedly sold multiple models of Nvidia AI chips, including the B200, H100, and H200, in potentially vast numbers.

The chips were allegedly sold in racks "about the size of a large suitcase" and packaged with the components and software needed to hook them directly into an existing data center. It's said that they were priced at around $489,000 per rack, which, the FT points out, would be a premium of around 50%, based on the average price of similar products in the US.

The investigation also alleges that some Chinese sellers were openly marketing the racks on social media, with some providers offering testing of the illicit chips to prove it was a "plug-and-play" procedure to hook them into existing data center infrastructure. One distributor apparently described the wealth of vendors as "like a seafood market... there's no shortage."

It's important to note that while it was (and still is) legal to receive restricted Nvidia chips in China, the entities selling and sending them would fall foul of the US regulations at the time. The FT points out that "there is no suggestion" that companies like Supermicro, Dell and Asus (whose product logos are said to be visible on packaging and installation images of the racks obtained by the FT) were aware of the social media advertising, or their products being sold in China.

Similarly, Nvidia told the FT that there was "no evidence of any AI chip diversion" and the Financial Times confirms that it found no evidence that the company is involved in, or has knowledge of, its restricted products being sold.

In May of this year, AI firm Anthropic warned of "sophisticated smuggling operations" of AI GPUs to China, "involving hundreds of millions of dollars worth of chips," a claim that Nvidia firmly dismissed. A company spokesperson told NBC that Anthropic was telling "tall tales", especially in regards to claims that "large, heavy, and sensitive electronics are somehow smuggled in 'baby bumps' or 'alongside live lobsters."

Still, according to the FT, $1 billion worth of the highly-prized hardware looks like it might have made it into the hands of Chinese vendors anyway. Nvidia has recently filed applications to sell the H20 GPU in China once more, with assurance from the US government that the licenses will be granted, and the warm dialogue between President Trump and Nvidia CEO Jensen Huang in recent days seems to confirm a conflict-free relationship between the two.

The first point of Trump's AI action plan references new export packages to "America's friends and allies around the world," so while sanctions may have been subverted in the past by unknown entities—and who counts as America's friend is variable on any given day—it looks like the official trade routes may be about to free up once more, hopefully making the need for some black markets a thing of the past.