Shenzhen's Underground Market Reveals Availability Of Nvidia AI Chips Despite U.S. Embargo

Shenzhen’s renowned Huaqiangbei electronics area in China has become the backdrop for a startling discovery in the availability of Nvidia Corp AI chips. As a result of the U.S. embargo, an underground market has emerged, with vendors navigating the scrutiny of both U.S. and Chinese authorities, according to a report by Reuters.

The bustling SEG Plaza skyscraper, spanning ten floors, is packed with shops offering a wide range of electronic components, including camera parts and drones. Within this labyrinth, two Chinese vendors claimed that they could supply limited quantities of Nvidia’s A100 artificial intelligence chips, pricing them at a steep $20,000 each—double the usual price.

Reuters interviewed ten vendors across Hong Kong and mainland China, all of whom shared their ease in acquiring small quantities of A100 chips. The buyers for these AI chips typically consist of app developers, startups, researchers, gamers, and even Chinese local authorities, as noted by one of the vendors.

Nvidia, however, stated that it strictly prohibits the export of A100 or H100 chips to China. Nevertheless, the Chinese vendors revealed their methods of obtaining the chips, which involved seizing excess stock after Nvidia’s shipments to major U.S. companies or importing through locally incorporated entities in places like India, Taiwan, and Singapore.

According to TrendForce’s estimation, a model similar to OpenAI’s GPT would necessitate more than 30,000 Nvidia A100 cards. However, even a small number of these chips can effectively tackle intricate machine-learning tasks and improve current AI models.

Caution was advised by some vendors due to the possibility of fraud, with refurbished chips being passed off as genuine A100s. However, the report suggests that the United States is likely to show indifference towards small transactions involving these chips unless China poses a more significant threat, as analyzed by Charlie Chai, a Shanghai-based analyst at 86Research.

Furthermore, the premiums charged by Chinese vendors for A100 and H100 chips may eventually decline as many of the Chinese AI startups, driving the demand for these chips, may withdraw from the market.

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