Over 14 billion yen worth of NVIDIA chips are being exported to China despite US export restrictions

The United States has strict regulations to prevent the export of cutting-edge technology to China, but China has used various evasive measures to obtain the latest technology. According to an investigation, it has been confirmed that more than $100 million (about 14.2 billion yen) worth of NVIDIA chips has been exported.

With Smugglers and Front Companies, China Is Skirting American AI Bans - The New York Times

Sanctioned China firms creating front companies to acquire AI chips, says report — new firms pop up faster than the US ban hammer can strike | Tom's Hardware

To prevent the diversion of military technology, the United States restricts the export of cutting-edge semiconductors to China. Although manufacturers are not violating these restrictions, it has been reported that cutting-edge semiconductors are actually being exported to China, and The New York Times stated that the total value of GPU transactions was as much as $103 million.

One of the methods they use is to have transactions conducted by companies that are not clearly connected to the Chinese government. For example, NVIDIA does not directly sell products to Chinese state-owned enterprises or companies related to them, but since it is impossible to fully understand what is happening to their customers' customers, there is a good chance that the products are ultimately delivered to companies related to the Chinese government.

Another method is to get chips before the company becomes subject to export restrictions. For example, a company called 'Sugon' was banned from purchasing NVIDIA chips because it was found to have ties to the Chinese military. A former executive at Sugon then started a new company called Nettrix, which became China's largest AI server manufacturer in just six months and is now a partner of NVIDIA, Intel, and Microsoft. This case is one in which the company may have been new enough that it was not thoroughly investigated by the US government, and NVIDIA and others are doing business with it, but they are not breaking the law.

The news site Tom's Hardware suggests that the only way to resolve this cat-and-mouse game would be to create a whitelist system where only approved buyers could legally source chips. But the industry is lobbying against such strict regulations, which it says would do more harm than good for American companies, making this unlikely to be implemented.