Breaking International Laws: Chinese Buyers Find Ways to Circumvent US Chip Restrictions

Chinese buyers are facing challenges as they attempt to circumvent US chip restrictions through smuggling, according to a report by The Wall Street Journal. Following the US ban on advanced Nvidia chip imports to China in 2022, some individuals have resorted to bringing the chips into the country through underground channels in their luggage.

In an effort to meet the demand for Nvidia’s most advanced chips, some Chinese firms have been repurposing gaming chips to power AI models, as reported by The Financial Times earlier this year. These advanced chips are highly sought after for training AI models, and some Chinese universities and research institutes have obtained them through resellers.

As a result of the US export ban, Nvidia does not sell directly to China, resulting in Chinese buyers resorting to unconventional methods for acquiring the chips. One method employed by these buyers is smuggling them into China through underground channels. Records, including customs filings, indicate that Nvidia chips are being purchased by Chinese buyers in an underground market.

One distributor in Beijing claimed to receive dozens of chips each month, emphasizing that “there is always a way” to smuggle them into China. Another broker mentioned acquiring chips through personal contacts at official distribution channels and system integrators in southeast Asia, eventually acting as an intermediary for buyers and handling transportation. One method employed by the broker was failing to declare chip model numbers on paperwork, as shown in customs filings reviewed by The Wall Street Journal.

The increased restrictions over the past year have made it more difficult for Chinese buyers to obtain Nvidia GPUs legally. However, this has only pushed some individuals and companies towards finding alternative sources of these valuable resources, even if it means breaking international laws and regulations.