Inside China's underground market for high-end Nvidia AI chips

Psst! Where can a Chinese buyer purchase top-end Nvidia AI chips in the wake of U.S. sanctions?

- Josh Ye, David Kirton, & Chen Lin

Visiting the famed Huaqiangbei electronics area in the southern Chinese city of Shenzhen is a good bet - in particular, the SEG Plaza skyscraper whose first 10 floors are crammed with shops selling everything from camera parts to drones. The chips are not advertised but asking discreetly works.

They don't come cheap. Two vendors there, who spoke with Reuters in person on condition of anonymity, said they could provide small numbers of A100 artificial intelligence chips made by the U.S. chip designer, pricing them at $20,000 a piece - double the usual price.

While buying or selling high-end U.S. chips is not illegal in China, U.S. export restrictions have created a de facto underground market with vendors keen not to draw scrutiny from either U.S. or Chinese authorities.

President Joe Biden's administration in September ordered Nvidia to stop exporting its two most advanced chips - the A100 and the recently developed H100 - to mainland China and Hong Kong, part of efforts to stymie Chinese AI and supercomputing development amid intensifying political and trade tensions. That was then followed up with an array of semiconductor-related export controls.

But, as AI booms across the globe after the runaway success of OpenAI's ChatGPT, demand for high-end chips has rocketed, particularly for Nvidia's microprocessors which are widely regarded as the best at handling machine-learning tasks.