Despite export restrictions imposed by Washington, Nvidia’s cutting-edge AI chips such as the A100 and H100 are easily finding their way into the Chinese market and are available at lower prices than in the US. A Financial Times investigation found that small Chinese cloud providers are offering server rentals with eight Nvidia A100s for around $6/hour, while similar services in the US cost around $10/hour or more.
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Low server rental prices point to the abundance of Nvidia chips in the Chinese market and ways to circumvent U.S. restrictions aimed at preventing access to cutting-edge technology. The A100 and H100 chips are the most powerful AI accelerators used to train large language models (LLMs) today, and despite the A100 being banned from exporting to China and the H100 being unapproved for sale, the chips remain available to local startups and resellers.
At the same time, large Chinese cloud operators such as Alibaba and ByteDance offer rentals of servers with Nvidia chips at prices two to three times higher than the prices of small providers. After discounts are applied, prices are still comparable to Amazon Web Services (AWS) prices, which range from $15 to $32 per hour. As one of the founders of the startup noted, “big players have to worry about compliance and are therefore at a disadvantage because they cannot use smuggled chips.”
According to experts, there are more than 100 thousand Nvidia H100s in China. The relatively small size of the chips makes them easier to smuggle across borders, undermining Washington’s efforts to curb AI development in China. The head of a small Chinese cloud company noted that low internal costs help offset the higher prices that providers pay for smuggling. “Engineers are cheap and electricity is cheap…” he explained.
Nvidia says it sells chips “primarily to official partners,” ensuring all sales comply with U.S. export controls. The company acknowledges the existence of a market for used accelerators, but promises to take action if export control violations are detected.
In general, experts doubt the effectiveness of American sanctions outside the United States, since schemes to circumvent restrictions include the creation of shell companies in third countries, which makes it difficult to track the final recipient. “It is difficult to fully enforce export controls beyond US borders,” the Financial Times quoted a US sanctions expert as saying. So, while Washington tries to limit China’s access to advanced technologies, Chinese companies continue to benefit from Nvidia chips.