In a sweeping investigation by the Financial Times, it’s been revealed that over $1 billion worth of high-end Nvidia AI chips have quietly entered China in just three months – despite strict U.S. export controls imposed under President Trump. The situation sheds light on a booming underground trade and the growing difficulty of keeping cutting-edge American technology out of Beijing’s hands.
At the center of the story is Nvidia’s B200 processor, a powerful AI chip that’s been restricted for sale to China due to its potential use in military and surveillance applications. Also caught in the dragnet are other top-tier chips like the H100 and H200. These processors are critical for training large-scale artificial intelligence models, and are widely used in the West by tech giants like OpenAI, Meta, and Google.
Despite the restrictions, Chinese data center suppliers have been able to access these chips through a thriving black market. Sales contracts, product listings, and interviews suggest the chips were routed into China via Southeast Asia, with shipments often originating from distributors in provinces like Guangdong, Zhejiang, and Anhui.
The Role of Bootleg Data Centers
Once in China, these chips are assembled into plug-and-play racks and installed in so-called “bootleg data centers” – operations not officially supported by Nvidia and lacking proper service agreements. These facilities are seen by experts as inefficient and risky.
“Trying to cobble together data centers from smuggled products is a losing proposition, both technically and economically,” Nvidia said in a statement. Without authorized service and maintenance, performance can degrade and failures become harder to fix.
Industry insiders also emphasize the chaotic nature of this shadow market. “It’s like a seafood market,” one Chinese distributor told the FT. “There’s no shortage.”
Who’s Behind the Sales?
A key player identified in the report is a company named “Gate of the Era,” based in Shanghai and reportedly responsible for nearly $400 million worth of B200 chip rack sales. Founded earlier this year in anticipation of tightened U.S. rules, the company reportedly operates with ties to another firm called China Century, which claims to work on “smart city” solutions and has listed cloud giants like Baidu and AliCloud as partners. Both companies have denied any wrongdoing.
The U.S.-based tech firm Supermicro, which assembles many of the AI racks that end up in China, stated it complies with all export rules and has no knowledge of its products being diverted.
A Losing Battle for Control
While it remains illegal for U.S. companies to knowingly export restricted chips to China, Chinese firms receiving and reselling them are operating in a legal gray area—as long as they pay domestic tariffs. Social media platforms in China now openly feature posts advertising not only the B200 but also the upcoming B300 and even the top-tier GB200 chips, often complete with photos and prices.
The market has become so active that some distributors are already promoting future stock of the B300 – Nvidia’s next-generation chip not even in mass production yet.
The U.S. Department of Commerce is reportedly considering adding further restrictions on chip exports to countries like Thailand, which has emerged as a transit point for these unauthorized shipments. But many experts suggest these efforts may fall short.
“Export controls will not prevent the most advanced Nvidia products from entering China,” said one Chinese data center operator. “What it creates is just inefficiency and huge profits for the risk-taking middle men.”
As the race for AI dominance accelerates, the smuggling of U.S. technology into China has become a cat-and-mouse game with high stakes- for both geopolitical control and the future of artificial intelligence.