Nvidia AI chips find backdoor to China despite us export ban

2025-03-03 nvidia

Washington, Monday, 3 March 2025.
Despite us export controls, Chinese firms are procuring Nvidia’s advanced Blackwell AI chips. These chips are rerouted via third-party nations such as Taiwan and Malaysia. Some sellers promise delivery within six weeks. A server with 8 AI processors can retail for over $600,000. This circumvention highlights the persistent demand and the difficulties in policing technology exports. Singapore authorities arrested individuals involved in illegally re-exporting Nvidia GPUs to Chinese AI firm DeepSeek.

Nvidia’s response and market reaction

Nvidia has stated that anonymous traders are incapable of providing the necessary software, services, support, and upgrades for Blackwell systems [2]. The company pledges to investigate and act on any reports of diversion [2]. Despite these efforts, the circumvention of export controls raises concerns about Nvidia’s revenue potential in the Chinese market and its ability to maintain a competitive advantage [1]. News of these violations caused Nvidia’s stock to fluctuate [7]. The company faces challenges in ensuring its AI processors don’t reach unauthorized customers, impacting investor confidence [7].

us government and export restrictions

The U.S. government’s export restrictions are intended to prevent China from using advanced AI chips for military purposes and to maintain a competitive edge in technology [6]. Former President Trump announced new restrictions on AI chip exports to China, highlighting concerns about China gaining an unfair advantage [6]. These restrictions primarily affect companies like Nvidia and AMD [6]. Mizuho Securities estimates these restrictions could impact Nvidia’s fiscal year 2026 revenue and EPS by $4–6 billion and $0.13–0.18, respectively [6].

singapore’s role and investigations

Singapore authorities are working with U.S. officials to investigate the illegal re-export of Nvidia chips [8]. Singapore’s Ministry of Trade and Industry noted that only a small fraction of Nvidia’s sales in Singapore remain in the country [8]. A significant portion is re-exported, highlighting the role of Singapore-based entities in facilitating these transactions [8]. Singapore has charged three men with fraud for allegedly circumventing U.S. trade restrictions by re-exporting Nvidia GPUs to DeepSeek [8]. The investigation involved raids at 22 locations and the arrest of nine individuals [8].

impact on asian markets

The news of Nvidia chips flowing to China through Malaysia has negatively impacted related stocks [5]. NationGate Holdings, a Malaysian AI server manufacturer, saw its stock price plummet [5]. On March 3, 2025, the stock fell by 29.73%, reaching its limit down, reflecting investor concerns [5]. The stock had previously reached a high of 2.95 MYR in early January 2025 but has since fallen by 55.93% [5]. This highlights the sensitivity of regional markets to developments in the semiconductor trade and export control enforcement [5].

Bronnen

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