Nvidia AI Chips Worth $1 billion Smuggled to China Despite US Ban

* Over $1 billion in banned Nvidia AI chips smuggled into China, bypassing U.S. export controls. * Chinese firm Gate of the Era identified as a major reseller for AI data center use. On July 24, 2025, The Financial Times reported that over $1 billion worth of Nvidia AI chips, including banned models, have flowed into China's black market despite U.S. export restrictions. These transactions, which include the sale of banned B200 processors across key regions of China, highlight significant enforcement challenges for U.S. efforts to limit Beijing's access to advanced semiconductor technology. The sales of these chips, which are critical for AI training and widely used by U.S. firms, point to loopholes in existing trade regulations. Chinese distributors in provinces like Guangdong, Anhui, and Zhejiang are selling Nvidia’s restricted chips, including the B200 model, along with the H100 and H200. U.S. law prohibits exporting certain AI chips to China without prior approval; however, after the chips enter China and tariffs are paid, their domestic resale becomes legal. The Anhui-based company Gate of the Era has emerged as a significant distributor, assembling B200 chips into racks containing eight processors each and selling them to data centers. The company prices these AI racks at around $489,000 per unit, a substantial markup over the original U.S. market price, and has reportedly sold nearly $400 million worth of these racks since May 2025. Although the smuggled chips reportedly power data centers, Nvidia has denied any knowledge of the unauthorized sales or involvement in the illegal trade, clarifying that building functional data centers with diverted chips is not economically or technically practical without official product support. Similarly, Supermicro, a U.S.-based firm identified as the original assembler of the racks, stated that it complies with U.S. export laws and is committed to investigating any potential violations. Currently, no evidence suggests Supermicro directly participated in the smuggling operations. In response, U.S. lawmakers are considering stricter measures to prevent similar unauthorized transfers, with proposals including additional export controls on AI products sent to intermediary markets like Thailand and new legislative requirements to verify chip locations after the sale. According to CoinMarketCap, Nvidia (NVDA) was trading at $525.42 as of July 24 at 12:00 UTC, reflecting a 1.4% decrease in its 24-hour trading volume.