This means the quantities they can secure are small, far from what's needed to build a sophisticated AI large language model from scratch.Ī model similar to OpenAI's GPT would require more than 30,000 Nvidia A100 cards, according to research firm TrendForce. The Chinese vendors said they procured the chips primarily in two ways: snatching up excess stock that finds its way to the market after Nvidia ships large quantities to big US firms, or importing through companies locally incorporated in places such as India, Taiwan and Singapore. Its new China-tailored slower variants - the A800 and H800 - developed to cushion that impact are now being bought by large Chinese tech firms such as Tencent Holdings and Alibaba, which have deep pockets to purchase huge quantities. Nvidia said in September that US$400 million in sales during its third quarter could be lost if Chinese firms decided not to buy alternative Nvidia products. The statement also said reports of parties seeking to obtain these chips through illicit means were "not a surprise", adding that "allegations of violations are investigated".Ĭhina's State Council Information Office and China's industry ministry did not respond to requests for comment. "If we receive information that a customer is breaching their agreement with us and exporting restricted products in violation of the law, we would take immediate and appropriate action," the statement said.Ī US Department of Commerce spokesperson said in a statement to Reuters that export control measures have had a "substantial impact" on China's availability of high-end chips. Nvidia said in a statement to Reuters it did not allow exports of the A100 or H100 to China, instead providing reduced-capability substitutes that comply with US law. One vendor said buyers also included Chinese local authorities. Reuters was not able to estimate overall volumes of Nvidia A100 and H100 chips flowing into China or learn to what extent the transactions taking place go towards satisfying demand.īuyers are typically app developers, startups, researchers or gamers, the vendors said, declining to be identified because the imports contravene US trade restrictions. Their information highlighted both intense demand in China for the chips and the relative ease with which Washington's sanctions can be circumvented for small-batch transactions. Reuters spoke to 10 vendors in Hong Kong and mainland China who described being able to easily procure small numbers of A100s. Those vendors, who bought the chips outside the US, were quoting HKUS$150,000 (US$19,150) per card, he said, adding that "they told us straight up that there will be no warranty or support." "We are talking with two vendors now to get some," said Ivan Lau, co-founder of Hong Kong's Pantheon Lab who is trying to purchase 2-4 new A100 cards to run the startup's latest AI models. That was then followed up with an array of semiconductor-related export controls.īut, as AI booms across the globe after the runaway success of OpenAI's ChatGPT, demand for high-end chips has rocketed, particularly for Nvidia's microprocessors which are widely regarded as the best at handling machine-learning tasks. President Joe Biden's administration in September ordered Nvidia to stop exporting its two most advanced chips - the A100 and the recently developed H100 - to mainland China and Hong Kong, part of efforts to stymie Chinese AI and supercomputing development amid intensifying political and trade tensions. While buying or selling high-end US chips is not illegal in China, US export restrictions have created a de facto underground market with vendors keen not to draw scrutiny from neither American nor Chinese authorities. Two vendors there, who spoke to Reuters in person on condition of anonymity, said they could provide small numbers of A100 artificial intelligence chips made by the US chip designer, pricing them at US$20,000 a piece - double the usual price. The chips are not advertised but asking discreetly works. Visiting the famed Huaqiangbei electronics area in the southern Chinese city of Shenzhen is a good bet - in particular, the SEG Plaza skyscraper whose first 10 floors are crammed with shops selling everything from camera parts to drones. Where can Chinese buyers obtain high-end Nvidia chips, despite US sanctions?
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