Nvidia, one of the most valuable players in the artificial intelligence race in the global technology market, is facing an unprecedented demand boom in the black market in China.

According to the latest report published by the Financial Times, the high demand of Chinese technology companies for artificial intelligence semiconductors and the ongoing US-China technology wars are literally doubling the prices of Nvidia’s banned artificial intelligence chips.

As the United States tightens export restrictions, the narrowing of illegal loopholes in the supply chain increases the risks of intermediaries and causes hardware prices to rise far above their actual cost.

Banned Nvidia Hardware Floats on the Black Market

The harsh embargoes imposed by the USA on China create a major hardware mania, especially for Chinese enterprises and technology giants that want to develop advanced artificial intelligence models.

However, the latest information shows that companies are sacrificing astronomical figures to achieve this hardware.

According to information based on interviews with Financial Times with Chinese chip traders, the price of Nvidia’s flagship DGX B300 server system has been rising from 4 million yuan to more than 8 million yuan (about $1.1 million) in the last six months.

The official sales price of this system, which contains eight advanced Blackwell graphics processing units, in the USA is only 400 thousand dollars.

Similarly, the price of the Nvidia RTX 6000 Pro workstation chip, which is a well-known option among enterprises that train large language models, jumps from 50 thousand yuan at the beginning of the year to 130 thousand yuan.

Even the price of servers with A100 accelerators, which is a five-year old technology, has tripled in the last period, reaching 600 thousand yuan (about 82 thousand dollars).

Smuggling Routes Are Closing, Risks Are Growing

The basis of these astronomical price increases in the black market lies in the aggressive operations launched by the USA against illegal chip exports.

The fact that one of Supermicro’s co-founders, along with a Taiwanese employee, was accused of smuggling $2.5 billion worth of Nvidia artificial intelligence servers to Chinese customers last March proves how serious international controls have become.

In addition to the USA, countries such as Taiwan and Malaysia are also strictly examining smuggling activities on recognized re-export routes to China.

As a result of these global pressures, supply channels are shrinking significantly.

Some traders in the industry state that legal loopholes are gradually closing and as prices increase, buying and selling these chips have become a much bigger risk for intermediaries.

China’s Local Production Intentions and Nvidia’s Statements

The Beijing administration is forcing companies to use chips from domestic manufacturers such as Huawei in order to break technological dependence on foreign hardware.

In fact, Chinese customs officials are trying to accelerate the adoption of domestic alternatives by even blocking the entry of some legally permitted processors into the country.

Despite all these efforts, it seems that Chinese technology companies are having a hard time giving up on the Nvidia ecosystem and are renting devices smuggled into the country at exorbitant prices.

Making a statement on the subject, an Nvidia spokesperson states that establishing huge and complex artificial intelligence data centers with illegal products is an almost impossible task.

The company firmly reminds that they do not provide support or repair services for any works subject to restrictions, and emphasizes that smugglers face the risk of being prosecuted in both parts of the world.