Chinese Military Purchases Nvidia Chips Bypassing U.S. Ban

Over the past year, Chinese military entities, state-run artificial intelligence research institutes, and universities have acquired US-banned Nvidia semiconductors through small batches, as revealed in a review of tender documents.

Despite the U.S. ban on exporting these chips to China, the transactions illustrate the challenges faced by Washington in entirely blocking China's access to advanced U.S. chips crucial for AI and advanced computing in military applications.

China Forges Ahead with Nvidia Chip Purchase

Chinese buyers, including elite universities and entities subject to U.S. export restrictions like the Harbin Institute of Technology and the University of Electronic Science and Technology of China, have obtained Nvidia semiconductors, including the banned A100 and H100 chips.

This signals a continued demand for these chips in China, emphasizing the absence of viable alternatives for Chinese firms, even with the emergence of rival products from companies like Huawei.

The Reuters review also found that neither Nvidia nor its approved retailers were among the identified suppliers.

The underground market for these chips in China has flourished, even after U.S. restrictions. Vendors are acquiring excess stock or importing through locally incorporated companies in various regions.

But despite U.S. export controls, an increasing number of tenders show state entities procuring Nvidia chips, particularly the A100 and A800 models, for applications in AI development.

While the quantities in these tenders are relatively small, they demonstrate the ongoing efforts to acquire and utilize these advanced chips. Essentially, Nvidia maintains compliance with export control laws and emphasizes that customers must adhere to the same standards.

Chris Miller, a professor at Tufts University, notes that achieving watertight export restrictions for small and easily transportable chips is challenging. The primary goal appears to disrupt China's AI development by impeding the construction of large clusters of advanced chips suitable for training AI systems.

In the meantime, the U.S. Department of Commerce has not commented on the matter. Still, U.S. authorities are actively working to address loopholes in export restrictions, aiming to restrict access to these chips by Chinese companies outside the country.

Nvidia's Market Growth

Nvidia, a leading manufacturer of Hardware and software for artificial intelligence (AI) computing, has experienced significant market growth. This is revealed in the company's technologies and solutions being widely employed in accelerated computing and generative AI applications, such as ChatGPT.

The company continues to show its prowess in multiple areas, including developing processors and chipsets, including graphics processing units (GPUs) catering to gaming and professional markets.

In the 2024 fiscal year, Nvidia's data center revenues surged noticeably, reaching 14.5 billion U.S. dollars in the third quarter. This growth is mainly attributed to the extensive use of Nvidia chips in training and running large language models.

Notably, OpenAI's ChatGPT, a prominent example, leverages Nvidia's cutting-edge technologies for optimal performance, further establishing Nvidia's influence in the AI and accelerated computing industry.

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