An estimated $1 billion worth of smuggled high-end Nvidia AI processors have reportedly found their way onto the Chinese black market, despite the US government's strict restrictions on exports of the tech.

The eyebrow-raising figure, which Nvidia has neither confirmed nor refuted, was [1]revealed by the Financial Times, which claims to have based its reporting on a combination of interviews and analyses of company filings and sales contracts. If accurate, the report sheds light on the limitations of the US trade policy's ability to control the movement of much sought-after AI technology around the world.

The specific chips cited are Nvidia's B200 series, part of the Blackwell architecture that [2]debuted last year . According to the FT's report, the units sold through China's black market are distributed as ready-made racks containing multiple processors each, which can be installed into datacenters without significant hardware integration. Software needed to fire up the racks is reportedly included in the bargain.

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These same chips are used by virtually all US AI powerhouses, including Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and others. However, exports of advanced Nvidia chips to China have been sharply restricted by US trade policy. That doesn't seem to have stopped the chips from making their way into the Middle Kingdom through less scrupulous distributors, often [4]rumored to include those in nearby countries such as Malaysia and Thailand.

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This sort of semiconductor skullduggery is nothing new for China, where an underground market for Western-designed semiconductors has long thrived. China's capacity for chip fabrication has lagged behind its economic competitors. Foremost among these is Taiwan, China's contentious neighbor and home to fab giant TSMC, which manufactures most of Nvidia's chips. Occasionally, rumors of a new, competitive, Chinese-produced microprocessor emerge, only for the shipping product to be revealed as little more than a bootlegged version of an earlier-generation chip by a Silicon Valley firm such as Intel or AMD.

In response, US lawmakers have increasingly tightened trade regulations on semiconductor technology sales to China, particularly where it comes to AI chips. The loudest voices have come from the so-called China hawks in Congress, who view the Asian nation as the US' leading opponent in a trade war in which technology is a key issue.

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Feeding this hostility are China's claims that it can achieve greater progress in AI research than US firms and with less. The researchers behind [8]DeepSeek , the Chinese large language model (LLM) announced earlier this year, claim it can achieve results equivalent to those of the best models designed by US AI titans, but with far less investment.

For a time, the Trump administration's ban on exports of AI chips to China was universal. As of [9]April , Nvidia could not sell AI chips to China. Earlier this month, however, the administration [10]lifted the ban , but only for comparatively underpowered chips such as the H20. Even this backpedal was met with [11]disapproval from some quarters of government.

Despite all this back-and-forth over which chips may be sold to China, the availability of processors from Nvidia and other suppliers on the Chinese black market has not abated. According to the FT report, the B200 series were not the only Nvidia AI chips available for sale through illicit means. Other models that seemingly "fell off the truck" include the H200, H100, and 5090.

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This is not a great look for Nvidia. The Silicon Valley-based chipmaker's big bet on AI processors has paid off handsomely, making it the first company in history to achieve a $4 trillion valuation. But accurate? The circulation of restricted Nvidia chips in China, even without the company's involvement, could still draw scrutiny from US lawmakers.

For its part, Nvidia stopped short of outright denying the claims of black market sales of its chip. However, in a statement to the FT, it dismissed the idea of what it described as "cobbled together" datacenters made from "smuggled products."

"Datacenters require service and support, which we provide only to authorized Nvidia products," a company spokesperson said.

[13]Nvidia to resume sales to China – with Trump administration approval

[14]Nvidia extends CUDA support to RISC-V just in time for next wave of Chinese CPUs

[15]Republican calls out Trump admin's decision to resume GPU sales to China

[16]AMD cleared to join Nvidia and resume selling some underpowered AI chips to China

The Chinese distributors selling the illicit merchandise, on the other hand, claim the prebuilt rack-mount processor units are virtually plug-and-play. The products are typically advertised on social media sites, and some vendors even advertise testing to ensure their customers are getting what they pay for.

That's only fair, because they pay a pretty penny. Chinese buyers of the illicit merchandise typically pay a 50 percent surcharge over what a legitimate customer in another region might spend.

Meanwhile, Jensen Huang, Taiwan-born co-founder and CEO of Nvidia, sees China as a significant opportunity for the company, both in terms of market and as a substantial source of talent. His negotiations with President Trump are thought to be a significant factor in the administration's choice to lift the blanket ban on Nvidia chip exports.

Other US companies are less bullish on Chinese partnerships. AWS recently [17]closed its AI lab in China , citing staff reduction and other "business decisions." It's unclear whether the Trump administration's continued escalation of its trade war with China played into this move, but there's little doubt that the chilly relations between the two global powers are unlikely to warm up soon. ®

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[1] https://www.ft.com/content/6f806f6e-61c1-4b8d-9694-90d7328a7b54

[2] https://www.theregister.com/2024/03/18/nvidia_turns_up_the_ai/

[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aIZNMTSDfC_4SyVw9YTdbQAAAEQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

[4] https://www.theregister.com/2025/07/15/malaysia_ai_chip_export_restrictions/

[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIZNMTSDfC_4SyVw9YTdbQAAAEQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aIZNMTSDfC_4SyVw9YTdbQAAAEQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aIZNMTSDfC_4SyVw9YTdbQAAAEQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[8] https://www.theregister.com/2025/07/19/openai_us_china/

[9] https://www.theregister.com/2025/04/09/nvidia_us_export_ban_change/

[10] https://www.theregister.com/2025/07/15/us_allows_nvidia_china_sales/

[11] https://www.theregister.com/2025/07/18/trump_gpu_china/

[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aIZNMTSDfC_4SyVw9YTdbQAAAEQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[13] https://www.theregister.com/2025/07/15/us_allows_nvidia_china_sales/

[14] https://www.theregister.com/2025/07/21/nvidia_cuda_riscv/

[15] https://www.theregister.com/2025/07/18/trump_gpu_china/

[16] https://www.theregister.com/2025/07/16/amd_china_chips/

[17] https://www.theregister.com/2025/07/24/aws_closes_shanghai_ai_lab/

[18] https://whitepapers.theregister.com/