Chinese vendors ride on high demand for Nvidia AI chips, sell at double the regular cost for ₹16.4 lakh per unit

According to anonymous vendors who spoke with Reuters, the A100 chips, manufactured by the US chip designer Nvidia, are available for a staggering price of $20,000 per unit—double the regular cost.

Though it is not illegal to buy or sell high-end US chips in China, the US export restrictions have given rise to an underground market. Vendors are cautious not to attract attention from either US or Chinese authorities.

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The export restrictions were initiated by President Joe Biden’s administration in an effort to impede Chinese AI and supercomputing development amid mounting political and trade tensions.

However, the global AI boom, fueled by the success of OpenAI’s ChatGPT, has generated an unprecedented demand for high-end chips, with Nvidia’s microprocessors widely regarded as the best for machine learning tasks.

While the exact volume of A100 and H100 chips entering China remains unknown, Reuters found that numerous vendors in both Hong Kong and mainland China can readily procure small quantities of A100 chips. Buyers typically include app developers, startups, researchers, and gamers. Notably, some Chinese local authorities are also among the purchasers.

Nvidia, in response to the situation, stated that they do not permit exports of the A100 or H100 to China and instead offer reduced-capability substitutes that comply with US regulations. The company added that they would take appropriate action against customers found to be in violation of their agreement.

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Chinese vendors acquire the chips through various means, such as obtaining excess stock after Nvidia ships large quantities to major US firms or importing them via companies incorporated in other locations, including India, Taiwan, and Singapore. However, these procurement methods result in limited quantities, insufficient for building sophisticated AI models from scratch.

Despite the relative ease with which these chips can be obtained, analysts believe that stricter enforcement may follow if China poses a more significant threat in the future. Moreover, the current premiums commanded by Chinese vendors for A100 and H100 chips could diminish as many Chinese AI startups are expected to eventually withdraw from the market.

(With Reuters inputs)

Updated: 20 Jun 2023, 09:40 AM IST

According to anonymous vendors who spoke with Reuters, the A100 chips, manufactured by the US chip designer Nvidia, are available for a staggering price of $20,000 per unit—double the regular cost.

Though it is not illegal to buy or sell high-end US chips in China, the US export restrictions have given rise to an underground market. Vendors are cautious not to attract attention from either US or Chinese authorities.

Also Read: How to make the perfect Father’s Day Pizza? ChatGPT answers

The export restrictions were initiated by President Joe Biden’s administration in an effort to impede Chinese AI and supercomputing development amid mounting political and trade tensions.

However, the global AI boom, fueled by the success of OpenAI’s ChatGPT, has generated an unprecedented demand for high-end chips, with Nvidia’s microprocessors widely regarded as the best for machine learning tasks.

While the exact volume of A100 and H100 chips entering China remains unknown, Reuters found that numerous vendors in both Hong Kong and mainland China can readily procure small quantities of A100 chips. Buyers typically include app developers, startups, researchers, and gamers. Notably, some Chinese local authorities are also among the purchasers.

Nvidia, in response to the situation, stated that they do not permit exports of the A100 or H100 to China and instead offer reduced-capability substitutes that comply with US regulations. The company added that they would take appropriate action against customers found to be in violation of their agreement.

Also Read: China won’t send arms to Russia for Ukraine war, says Antony Blinken

Chinese vendors acquire the chips through various means, such as obtaining excess stock after Nvidia ships large quantities to major US firms or importing them via companies incorporated in other locations, including India, Taiwan, and Singapore. However, these procurement methods result in limited quantities, insufficient for building sophisticated AI models from scratch.

Despite the relative ease with which these chips can be obtained, analysts believe that stricter enforcement may follow if China poses a more significant threat in the future. Moreover, the current premiums commanded by Chinese vendors for A100 and H100 chips could diminish as many Chinese AI startups are expected to eventually withdraw from the market.

(With Reuters inputs)

Updated: 20 Jun 2023, 09:40 AM IST