The black market prices of Nvidia AI chips have more than doubled in China due to strict US export controls.

Consequently, Chinese technology companies are facing severe hardware shortages as they race to deploy local artificial intelligence applications.

According to multiple chip traders, the price of the flagship DGX B300 server has soared to over $1.1 million over the past six months. This system, which contains eight Blackwell graphics processing units, typically retails in the US for about $400,000.

Meanwhile, the RTX 6000 Pro workstation chip has risen in cost from Rmb50,000 to Rmb130,000 since the start of the year. Both hardware systems are officially barred from export to China under Washington’s trade restrictions.

Surging Prices for Nvidia AI Chips

Traders stated that the price increases show that demand for high-performance computers remains strong despite Beijing’s push for domestic alternatives. However, the risks for intermediaries have grown significantly as US authorities step up investigations into illicit exports.

In March, a Supermicro co-founder was charged alongside a Taiwan-based employee and a contractor for smuggling $2.5 billion of servers. Although Supermicro was not named as a defendant, the case represents the largest US law enforcement action regarding AI hardware.

Squeezed Supply Routes and Enforcement

In response to the smuggling networks, Taiwanese and Malaysian authorities have also launched investigations into re-export routes. Nvidia stated that attempting to build data centres from contraband is a dead-end because the company does not provide support or repairs for restricted products.

At the same time, Chinese customs authorities have tightened scrutiny on permitted Nvidia AI chips like the H20 and H200. This domestic pressure aims to accelerate the adoption of local processors, such as the Huawei Ascend 950PR.

Alternative Hardware and Modifications

To bypass these restrictions, Chinese buyers are purchasing older generations of data centre equipment, including the A100 accelerator. Prices for servers containing A100 chips have subsequently risen from Rmb200,000 to Rmb600,000 since late last year.

Furthermore, some buyers are acquiring gaming processors that can be modified to run AI workloads. While some H200 processors are still obtained through Hong Kong, traders noted that these informal transactions carry substantial risks.

Impact on Cloud Rental Costs

The tightening supply of Nvidia AI chips has also driven up the cost of renting computing capacity in China. Previously, GPU rental prices in China were lower than in the US, but they have now reached comparable or higher levels.

Ultimately, the rising costs of memory chips and hardware have made it difficult for local firms to expand. Many brokers have reportedly taken deposits without having actual access to the restricted inventory.