Nvidia not permitted to sell its most advanced chips to China

Indian Express

a day ago

Demand in China has begun surging for a business that, in theory, shouldn't exist: the repair of advanced Nvidia artificial intelligence chipsets that the U.S. has banned the export of to its trade and tech rival.
Around a dozen boutique companies now offer repair services, according to two such firms in the tech hub of Shenzhen which say they predominantly fix Nvidia's H100 graphics processing units (GPUs) that have somehow made their way to the country, as well as A100 GPUs and a range of other chips.
Even before it was launched, the H100 was banned from sale in China in September 2022 by U.S. authorities keen to rein in Chinese technological development, particularly advances that its military could use. Its predecessor, the A100, was also banned at the same time after being on the market for over two years.
'There is really significant repair demand,' said a co-owner of a firm that has been fixing Nvidia's gaming GPUs for 15 years and began working on AI chips in late 2024.
Business has been so good that the owners created a new company to handle those orders, which now repairs up to 500 Nvidia AI chips per month. Its facilities, as shown in social media advertising, include a room which can accommodate 256 servers, simulating customers' data centre environments to conduct testing and validate repairs.
The rapid growth of the repair industry from late last year supports the view that there has been a significant amount of smuggling of Nvidia chipsets into China. Tenders have shown that the government and the military have made purchases of the U.S. firm's banned AI chips.
Concern about large-scale smuggling of high-end Nvidia products into China has prompted both Republican and Democratic lawmakers to introduce bills that would require the tracking of chipsets so that their location can be verified after they are sold. U.S. President Donald Trump's administration also backed the idea this week.
The thriving repair industry also highlights how Nvidia's advanced GPUs remain in high demand despite new, albeit less powerful, products from Chinese tech giant Huawei .
Though the buying, selling and repair of Nvidia GPUs is not illegal in China, sources for this article were reluctant to draw scrutiny from U.S. or Chinese authorities and declined to be identified.
Nvidia cannot legally provide repair or replacement items for restricted products in China. In contrast, sources said if an Nvidia GPU in another nation has a defect and is under warranty, which is normally three years, the company usually replaces it.
An Nvidia spokesperson said only the company and authorised partners 'are able to provide the service and support that customers need. Using restricted products without approved hardware, software, and technical support is a nonstarter, both technically and economically.'
REPAIR DEMAND MAY NOT FADE
Nvidia has only just been allowed to recommence sales of its H20 AI chipset, which has been specifically developed for China to comply with U.S. restrictions. Switching over to H20 chipsets is, however, not necessarily a simple or good option for Chinese entities.
Price is an issue as one H20 server with eight GPUs inside will likely cost more than 1 million yuan ($139,400), industry sources say. H20 chipsets, which have increased memory bandwidth, have been specifically designed for AI inference work, but firms involved in the training of large language models would likely prefer H100 chipsets which are better suited to that task.
Industry sources said some of the H100 and A100 GPUs in China have been crunching data around the clock for years now, leading to an increase in failure rates. Depending on how frequently a GPU is used and how often it is maintained, an Nvidia GPU generally lasts two to five years before needing to be repaired, they said.
According to the first source, his company charges between 10,000 yuan and 20,000 yuan ($1,400 to $2,800) to fix a GPU depending on the complexity of the problem.
The second Shenzhen-based repair service provider – which shifted from GPU rentals to repairs this year – says it can repair up to 200 Nvidia AI chips each month, charging about 10% of the GPUs' original selling price per repair.
Services generally include software testing, fan repair, printed circuit board and GPU memory fault diagnostics and repair, as well as the replacement of broken parts.
In the meantime, smuggling of high-end Nvidia chips continues. Traders of chips in China say customer demand is pivoting to top-of-the-line B200 chips which Nvidia began shipping to other countries in larger quantities this year.
A server with eight B200 GPUs costs more than 3 million yuan in China, they said.