In late 2022, the US implemented restrictions on exporting high-end GPU models such as the Nvidia A100 and H100 to China.
These measures were aimed at preventing US technology from advancing Chinese military capabilities and supercomputing infrastructure, and in response, Nvidia developed the A800 and H800 models with reduced capabilities to comply with these export controls.
In 2023, driven by concerns that even these downgraded models could significantly contribute to Chinese technological and military advancements, counter to US national security interests, the restrictions were expanded to include these newer models. The clampdown continues even now, with tighter controls on quantum computing and semiconductor goods added to the list this month.
Secondary market in China causes problems
Despite these measures, an Financial Times (FT) report has claimed Nvidia's high-end AI GPUs are widely available for rent in China and are cheaper than in the US, with the price disparity is largely due to a robust black market in China that flouts US export controls.
The FT’s investigation revealed that small-scale Chinese cloud providers are offering Nvidia A100 servers at prices up to 40% lower than their American counterparts. It identified four Chinese providers charging about $6 per hour for 8-way Nvidia A100 GPU servers, compared to around $10 per hour in the US. This indicates not only a widespread smuggling operation but also a thriving resale market within China.
According to the report, these GPUs are openly sold on Chinese platforms like Taobao and Xiaohongshu, and physically in markets such as Shenzhen’s Huaqiangbei, often at slightly higher prices than those outside China. Common tactics include erasing GPU serial numbers to evade detection, undermining US efforts to control the use of its cutting-edge technology.
Larger Chinese companies like Alibaba and ByteDance, which focus on legal compliance, charge much higher rates - similar to Amazon Web Services, which ranges from $15 to $32 per hour - this suggests they avoid using smuggled GPUs to maintain their business integrity.
Although Nvidia is working hard to comply with US export laws through its partnerships, tracking the second-hand sales of its products remains a significant challenge. This difficulty underscores the complexities of managing black markets that operate outside international regulations.
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