Nvidia’s AI Chips Cheaper to Rent in China than US, Despite Ban

Nvidia’s AI chips are reportedly cheaper to rent in China than in the U.S. despite strict export controls aimed at limiting China’s access to advanced chips.?

According to a report from the Financial Times (FT), small Chinese cloud providers are charging roughly $6 per hour to rent servers equipped with eight Nvidia A100 processors, compared to $10 per hour charged by their U.S. counterparts.

Meanwhile, China’s larger tech giants, such as Alibaba and ByteDance, charge higher prices – closer to global rates – but still offer competitive deals that rival major U.S. providers like Amazon Web Services (AWS), which charges $15 to $32 per hour.

How Nvidia Chips Get to the Chinese Market

While the U.S. government has placed a ban on the export of A100 chips to China since late 2022 and restricted the sale of the H100, Chinese companies are reportedly acquiring them through unofficial channels.

The chips are being smuggled into China from countries like Japan, Malaysia, and Indonesia and are advertised on e-commerce platforms such as Xiaohongshu and Taobao, the FT found. A Chinese startup founder told the FT that the Nvidia chips they bought were smuggled from Japan, with serial numbers removed.

Despite these revelations, Nvidia has reiterated that it sells its processors primarily to trusted partners and complies with U.S. export regulations. However, experts say the enforcement of export controls becomes more challenging once products are sold internationally, allowing for gray-market channels to thrive.

In addition to its international challenges, Nvidia is currently facing a domestic antitrust investigation in the U.S. The Department of Justice recently escalated its probe into Nvidia’s dominance in the AI chip market, raising concerns about anti-competitive practices.

This ongoing investigation has caused Nvidia’s shares to fluctuate, adding further uncertainty to the company’s future amid its global expansion efforts.