Chinese vendors are making a killing selling Nvidia's AI chips

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Chinese vendors in the city of Shenzen are selling Nvidia's high-end AI chips for double the asking price. The underground market for imported US components has sprung up in the wake of US imposed sanctions on the country's semiconductor industry.

According to Reuters, the Huaqiangbei electronics area in Shenzen is selling the chips at $20,000 per unit, more than double the asking price. It's worth noting that buying or selling US-based components isn't illegal in China. But in the wake of US export restrictions, the vendors are careful not to catch the eye of the authorities.

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In November last year, US President Joe Biden ordered Nvidia to stop exporting two of its most advanced chips to China and Hong Kong, but the demand for these chips in the mainland has skyrocketed creating an underground market.

Reuters spoke with more vendors in the market area that said it was easy to procure and sell the chips in small quantities but offered no warranty or support.

The chips were most sought after by AI startups, app developers, researchers and gaming companies. Reportedly, local Chinese authorities have also shown interest in the chips.

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In a statement shared with Reuters, Nvidia said that if it receives "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”.

These chips usually find their way to China by either snatching up extra stock or importing through countries such as India, Taiwan and Singapore. Some vendors also cautioned against fraud.