The Chinese military successfully circumvents US restrictions on Nvidia chips.

Despite the US ban, the Chinese military and government have managed to procure Nvidia chips. Publicly available tender documents reveal that numerous Chinese entities have bought Nvidia’s A100 and H100 chips, extensively utilized in artificial intelligence applications.

Amid ongoing trade tensions, a detailed examination of tender documents by Reuters reveals a nuanced story about the acquisition of Nvidia semiconductors by Chinese military entities, state-run AI research institutes, and universities. Despite strict US export bans on these chips to China, a discerning analysis of publicly available documents exposes the procurement of small batches of Nvidia semiconductors over the past year.

The focus of these purchases includes Nvidia’s A100 and the more powerful H100 chips, both of which faced export restrictions to China and Hong Kong in September 2022. The introduction of the slower A800 and H800 chips by Nvidia for the Chinese market faced prohibitions in October of the same year.

The significance of Nvidia’s graphic processing units (GPUs) for AI work, recognized for their efficiency in processing large datasets crucial for machine-learning tasks, underscores the continued demand for these chips in China. Despite nascent developments of rival products from companies like Huawei, the Reuters review highlights the lack of viable alternatives for Chinese firms, with Nvidia holding a substantial 90% share of China’s AI chip market before the bans.

The list of purchasers includes elite universities and entities subject to US export restrictions, such as the Harbin Institute of Technology and the University of Electronic Science and Technology of China. Accusations of engagement in military affairs or association with military organizations contrary to the national interest of the United States have been directed at these entities.

The Chinese military successfully circumvents US restrictions
The Chinese military successfully circumvents US restrictions

An intriguing revelation is the discovery of an underground market for prohibited chips in China. Chinese vendors claim to obtain excess stock through various channels, including purchasing from large US firms or importing through locally incorporated companies in places like India, Taiwan, and Singapore.

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Nvidia, responding to these developments, underscores its adherence to all applicable export control laws and expects the same from its customers. The company asserts that any illicit resale to third parties will be met with immediate and appropriate action. On the US front, authorities have expressed a commitment to closing loopholes in export restrictions and restricting access to chips by units of Chinese companies outside China.

However, experts like Chris Miller, a professor at Tufts University, caution against harboring unrealistic expectations of making export restrictions foolproof. The inherent challenge lies in the small and easily smuggled nature of chips.

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