There's an underground network smuggling NVIDIA AI GPUs into China, we're totally NOT surprised

China has had its access to the latest and greatest AI GPUs and AI accelerators limited through US restrictions and sanctions, with a network of buyers, sellers, and countries bypassing the US-led rules, smuggling the best AI chips into China anyway.

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In a new report from The Wall Street Journal, we're learning that a 26-year-old Chinese student smuggled NVIDIA AI GPUs from Singapore into China last fall. The student packed his suitcase with 6 x NVIDIA compute cards (or modules) with his personal belongings, with each of the add-in boards at about the size of the portable Nintendo Switch console, unnoticed through the airport.

The student declared the value of the AI cards at just $100 each, which is a tiny fraction of the real cost on the (growing) underground market, but it the student didn't raise any red flags when traveling through Singapore (which isn't worried about smuggling advanced AI chips into China), or China, which is interested in getting said advanced AI chips, as well as import duties.

The Wall Street Journal reports that the student's smuggling AI GPUs into China is part of a much larger, loosely hidden operation to avoid restrictions placed by the US government, as NVIDIA's latest AI GPUs are in massive demand as the CUDA framework is quite popular in China's AI businesses, with both education and commercial developers.

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There are now over 70 distributors through both education and commercial developers that are selling the restricted AI chips online, with multiple verified sellers claiming to have dozens of NVIDIA's high-end AI GPUs available each month, so it's not like this is just a once-off. The sellers address both startups and research institutions with their limited needs, offering up pre-orders and deliveries within a few weeks. Some distributors even offer servers with 8 x NVIDIA AI GPUs inside for $300,000.

The Wall Street Journal reports that a broker based in Singapore, Brother Jiang, works on smuggling the NVIDIA AI GPUs by leveraging contacts throughout his distribution channels and system integrators based in Southeast Asia. This broker assists Chinese customers with getting their hands on AI processors and servers, arranging logistics and customs paperwork, with Jiang's network not accepting large orders so that the deals remain anonymous, but provides a steady but limited supply of NVIDIA's best-in-class AI GPUs.

We're talking about NVIDIA's Ampere-based A100 and Hopper-based H100 AI GPUs, with super-high (above retail) pricing in China. NVIDIA is blocked from selling its AI GPUs directly to China, but Chinese research institutes and universities continue getting their hands on them, unofficially, avoiding US restrictions. The underground market is changing to the new rules and increased demand, even with the US restrictions in place.

A Beijing-based distributor, when asked about how they get the AI chips into China, said: "It does become very hard, but don't be silly, there is always a way".

A student who purchased NVIDIA AI GPUs and had them in his suitcase said he's willing to transport the forbidden AI chips into the country again, with the student saying: "I'm glad I was able to do something for my country -- and make a little extra money. So, why not?"