Nvidia Slams AI Chip Smuggling: Warns Bootleg Data Centers in China Are a Risky Gamble
Nvidia issued a strong warning on Thursday about the use of unauthorized AI chips in underground data centers, calling the practice both technically flawed and economically unsustainable. The statement followed a recent investigative report alleging that over $1 billion worth of Nvidia’s high-performance chips have been illicitly funneled into China.
“Building data centers using smuggled hardware is a losing strategy,” a company spokesperson stated. “These facilities require proper support and service—something we only offer for officially approved Nvidia products.”
The unauthorized shipments reportedly surged as U.S. export restrictions, initiated under former President Donald Trump, tightened on the company’s H20 chips. Despite bans, Nvidia’s powerful B200 processors have found their way into Chinese hands through gray-market channels, according to insider sources, corporate records, and leaked agreements.
Chinese vendors began offering the restricted chips as early as May, targeting AI-focused clients operating large-scale server infrastructure. While China remains a lucrative market for AI components, U.S. regulations have increasingly blocked the sale of cutting-edge processors to prevent technology transfers tied to national security risks.
Recently, Nvidia CEO Jensen Huang suggested the company may soon resume official H20 chip sales to China after regulatory progress with U.S. officials. Earlier this year, the U.S. government had halted those sales, requiring special licenses for any exports.
Huang has expressed hopes to eventually supply even more advanced chip models to the Chinese market, signaling that Nvidia’s focus on China remains strategic—despite ongoing geopolitical tensions.
