{"version":1,"tree":{"n":"html","c":[{"n":"head","x":"\n ","l":"\n ","c":[{"n":"title","x":"Desconocido","l":"\n \n "},{"n":"link","l":"\n","a":[["rel","stylesheet"],["type","text/css"],["href","../../stylesheet.css"]]},{"n":"link","l":"\n","a":[["rel","stylesheet"],["type","text/css"],["href","../../page_styles.css"]]}]},{"n":"body","a":[["class","calibre"]],"c":[{"n":"div","x":"| ","a":[["class","calibre_navbar"]],"c":[{"n":"a","x":"Siguiente","l":" | ","a":[["href","javascript:void(0)"],["rel","articlenextlink"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"feed_12/article_1/index_u57.html\", \"frag\": \"\"}"]]},{"n":"a","x":"Menú de sección","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"feed_12/index_u18.html\", \"frag\": \"article_0\"}"]]},{"n":"a","x":"Menú principal","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"index_u63.html\", \"frag\": \"feed_12\"}"]]},{"n":"hr","l":"\n","a":[["class","calibre6"]]}]},{"n":"div","a":[["class","calibre-nuked-tag-article"]],"c":[{"n":"div","x":"Nvidious","a":[["class","calibre8"]]},{"n":"h1","x":"How China is still getting its hands on Nvidia’s gear","a":[["class","calibre9"]]},{"n":"div","x":"Inside the shadowy business of smuggling AI chips","a":[["class","calibre19"]]},{"n":"p","x":"may. 08, 2025 01:50 ","a":[["class","calibre10"]]},{"n":"div","a":[["class","calibre-nuked-tag-article"]],"c":[{"n":"img","a":[["src","images/img1_u35.jpg"],["title",""],["class","calibre3"],["data-calibre-src","feed_12/article_0/images/img1_u35.jpg"]]}]},{"n":"div","a":[["class","calibre11"]]},{"n":"p","a":[["class","calibre12"]],"c":[{"n":"span","x":"L","a":[["data-caps","initial"],["class","calibre13"]]},{"n":"span","x":"AST MONTH","l":" Jensen Huang, the boss of Nvidia, landed in Beijing with a clear message: the maker of the world’s leading ","a":[["class","calibre14"]]},{"n":"a","x":"artificial-intelligence","l":" (","a":[["href","https://www.economist.com/leaders/2025/04/24/how-to-keep-ai-models-on-the-straight-and-narrow"]]},{"n":"span","x":"AI","l":") chips planned to “unswervingly serve the Chinese market”. America would rather it didn’t. Just a few days before Mr Huang’s trip the Trump administration introduced new controls that, in effect, banned the company from selling its ","a":[["class","calibre14"]]},{"n":"span","x":"H","l":"20 processor to China. More rules are coming. Although on May 7th the administration said it would rescind tighter export controls proposed by the Biden administration, it plans to replace them with ones of its own.","a":[["class","calibre14"]]}]},{"n":"p","x":"Over the past few years America has sought to hobble its main rival in the ","a":[["class","calibre12"]],"c":[{"n":"span","x":"AI ","l":"race by restricting its access to advanced semiconductors. The performance of an ","a":[["class","calibre14"]]},{"n":"span","x":"AI ","l":"processor depends mostly on two factors: computing power (how fast a chip processes data) and memory bandwidth (how quickly it moves data between processing and memory). In October 2022 the Biden administration barred sales to China of American chips that exceed a threshold on both fronts. ","a":[["class","calibre14"]]},{"n":"a","x":"Nvidia","l":" responded with the ","a":[["href","https://www.economist.com/culture/2025/04/10/nvidia-and-jensen-huang-are-a-study-in-contradictions"]]},{"n":"span","x":"H","l":"800, a made-for-China model engineered to stay just under the limits. A year later, America tightened the regulations again, banning any chip with too much computing power, regardless of memory bandwidth. Nvidia’s answer was the ","a":[["class","calibre14"]]},{"n":"span","x":"H","l":"20.","a":[["class","calibre14"]]}]},{"n":"p","x":"The trouble for America is that restricted Nvidia chips continue to make their way into the hands of Chinese ","a":[["class","calibre12"]],"c":[{"n":"span","x":"AI","l":" developers. A shadowy supply chain has emerged, designed to work around sanctions. Some customers lease access to offshore data centres; others buy chips through murky intermediaries. Further attempts to curb the flow of chips are likely to suffer from many of the same problems.","a":[["class","calibre14"]]}]},{"n":"p","x":"To see why it is so difficult to restrict access to ","a":[["class","calibre12"]],"c":[{"n":"span","x":"AI ","l":"chips, consider Johor, a part of southern Malaysia once better known for its palm-oil plantations. Located just across the border from Singapore, the region has become a hub for data centres. Land and electricity are cheap, and permits easier to obtain than in the city-state. All the big American cloud providers—Amazon, Google, Microsoft and Oracle—have set up shop. According to Knight Frank, a property consultancy, Johor’s total data-centre capacity (built, under construction or planned) grew from 10 megawatts in early 2021 to more than 1,500 megawatts by 2024.","a":[["class","calibre14"]]}]},{"n":"p","x":"Johor also provides a convenient back door into China. Big Chinese firms such as ByteDance, the owner of TikTok, have rented capacity there. Leasing cloud capacity in Malaysia allows companies like it to gain access to chips that cannot be imported into China. SemiAnalysis, a consultancy, estimates that nearly half of Johor’s projected data-centre capacity in 2027 will incorporate ","a":[["class","calibre12"]],"c":[{"n":"span","x":"AI","l":" processors such as Nvidia’s. Malaysian data-centre operators insist that they comply with American export regulations and do not provide capacity to blacklisted entities. Yet finding workarounds is straightforward. A lawyer advising firms in the region says that it is relatively easy for Chinese companies to get hold of restricted ","a":[["class","calibre14"]]},{"n":"span","x":"AI","l":" chips by setting up local subsidiaries.","a":[["class","calibre14"]]}]},{"n":"div","a":[["class","calibre-nuked-tag-article"]],"c":[{"n":"img","a":[["src","images/img2_u9.png"],["title",""],["class","calibre3"],["data-calibre-src","feed_12/article_0/images/img2_u9.png"]]}]},{"n":"div","a":[["class","calibre11"]]},{"n":"p","x":"Figures on trade flows support this. Nvidia’s high-end chips are produced by ","a":[["class","calibre12"]],"c":[{"n":"span","x":"TSMC","l":", the world’s biggest chipmaker, in its Taiwanese factories. In the first quarter of this year Taiwan exported $3.6bn-worth of graphics-processing units—the kind used to train ","a":[["class","calibre14"]]},{"n":"span","x":"AI","l":" models—to Malaysia, nearly matching the total for all of 2024 (see chart 1). In March alone shipments more than tripled from the previous month to reach almost $2bn.","a":[["class","calibre14"]]}]},{"n":"p","x":"Then there are the smugglers who traffic chips directly into China. These are typically diverted through third countries not covered by American restrictions. A source familiar with the practice says goods often pass through several jurisdictions and front companies to obscure their origin. Export papers are doctored; restricted products are mislabelled to slip past customs. Erich Grunewald of the Institute for ","a":[["class","calibre12"]],"c":[{"n":"span","x":"AI ","l":"Policy and Strategy, a think-tank based in San Francisco, estimates that last year smuggled American chips made up between a tenth and a half of China’s","a":[["class","calibre14"]]},{"n":"span","x":" AI-","l":"model-training capacity.","a":[["class","calibre14"]]}]},{"n":"p","x":"Before the first round of export controls in 2022, China accounted for about 22% of Nvidia’s revenue. That share has since fallen to 13%. At the same time, sales to Singapore—a city with few end-users—have more than doubled, and now make up nearly 18% of the total, making it Nvidia’s second-largest market after America (see chart 2). The company says the shift is routine: many clients invoice through Singapore but ship to permitted destinations. Fewer than 2% of chips sold there are delivered locally.","a":[["class","calibre12"]]},{"n":"div","a":[["class","calibre-nuked-tag-article"]],"c":[{"n":"img","a":[["src","images/img3_u2.png"],["title",""],["class","calibre3"],["data-calibre-src","feed_12/article_0/images/img3_u2.png"]]}]},{"n":"div","a":[["class","calibre11"]]},{"n":"p","x":"In February, however, Singaporean police arrested three men over the sale of $390m-worth of servers that incorporated Nvidia chips. Prosecutors allege these were first sent to Singaporean firms, then re-exported to Malaysia. Whether that was their final stop remains unknown. What is clearer is the incentive: demand has turned the grey market into a gold mine. According to one industry executive, banned Nvidia chips now sell at a 30-50% mark-up through intermediaries.","a":[["class","calibre12"]]},{"n":"p","x":"China is not the only destination. In October America placed several Indian firms under sanctions for re-exporting restricted chips to Russia. Among them was Shreya Life Sciences, a pharmaceutical firm based in Mumbai. According to figures from The Trade Vision, a data provider, it exported $322m-worth of tech goods to Russia in 2024, much of it Dell servers containing Nvidia chips.","a":[["class","calibre12"]]},{"n":"p","x":"All this puts Nvidia in a tricky position. The firm insists it complies with American export rules. But its operations are vast: it expects to sell more than 6m ","a":[["class","calibre12"]],"c":[{"n":"span","x":"AI","l":" chips this year and it sits several steps removed from the end user. Nvidia supplies processors to cloud giants such as Google and Microsoft, and to equipment-makers like Dell and Supermicro, which integrate them into servers. From there, responsibility for compliance is diffuse. Cloud providers and hardware firms are expected to vet their customers. Nvidia itself conducts periodic audits. But oversight is uneven, and servers often change hands quietly after passing initial checks. One executive at a server manufacturer says properly verifying all end users is “practically impossible”.","a":[["class","calibre14"]]}]},{"n":"p","x":"The Biden administration had drawn up an elaborate plan that would have restricted access to ","a":[["class","calibre12"]],"c":[{"n":"span","x":"AI","l":" chips for 120-odd countries in a bid to choke off China. Mr Trump’s commerce department now promises to introduce “a much simpler rule”. That is a relief for Nvidia: the countries that would have faced curbs accounted for about a quarter of its sales. Some now expect the administration to use access to American chips as leverage in trade talks. It is also said to be considering beefing up restrictions on the flow of ","a":[["class","calibre14"]]},{"n":"span","x":"AI","l":" processors to countries through which China has tended to gain access, such as Malaysia.","a":[["class","calibre14"]]}]},{"n":"h4","x":"The chip has sailed","a":[["class","calibre15"]]},{"n":"p","x":"Any new controls will encounter familiar problems. The Bureau of Industry and Security (","a":[["class","calibre12"]],"c":[{"n":"span","x":"BIS","l":"), the agency tasked with enforcing controls on tech exports, is severely understaffed. It has just one export-control officer responsible for all of South-East Asia and Australasia—a region central to the shadow trade in ","a":[["class","calibre14"]]},{"n":"span","x":"AI","l":" chips.","a":[["class","calibre14"]]}]},{"n":"p","x":"Some pundits have proposed technical solutions, such as disabling chips used in prohibited locations. Nvidia argues that such hardware-level controls would introduce dangerous vulnerabilities and are not workable. Instead, it suggests that software tools could transmit limited telemetry—including information on location and system configuration—back to the company to confirm that the chips are where they are supposed to be.","a":[["class","calibre12"]]},{"n":"p","x":"Even better enforcement has its limits, however. Nvidia cannot trace every chip. ","a":[["class","calibre12"]],"c":[{"n":"span","x":"BIS","l":" cannot inspect every server. Smugglers will continue to find loopholes. If America wants to keep ahead of China in the ","a":[["class","calibre14"]]},{"n":"span","x":"AI","l":" race, it will need to innovate faster, rather than clamp down harder. ","a":[["class","calibre14"]]},{"n":"span","x":"■"}]},{"n":"p","a":[["class","calibre12"]],"c":[{"n":"i","a":[["class","calibre18"]],"c":[{"n":"b","x":"Editor’s note (May 8th 2025)","l":": This article has been updated.","a":[["class","calibre13"]]}]}]},{"n":"p","a":[["class","calibre12"]],"c":[{"n":"i","x":"To stay on top of the biggest stories in business and technology, sign up to the ","a":[["class","calibre18"]],"c":[{"n":"a","x":"Bottom Line","l":", our weekly subscriber-only newsletter.","a":[["href","https://www.economist.com/newsletters/the-bottom-line"]]}]}]}]},{"n":"div","x":"\n","a":[["class","calibre_navbar"]],"c":[{"n":"hr","l":"\n","a":[["class","calibre6"]]},{"n":"p","x":"This article was downloaded by ","l":"\n","a":[["class","calibre16"]],"c":[{"n":"strong","x":"calibre","l":" from ","a":[["class","calibre13"]]},{"n":"a","x":"https://www.economist.com/business/2025/05/05/how-china-is-still-getting-its-hands-on-nvidias-gear","a":[["href","https://www.economist.com/business/2025/05/05/how-china-is-still-getting-its-hands-on-nvidias-gear"],["rel","calibre-downloaded-from"]]}]},{"n":"br","a":[["class","calibre-nuked-tag-article"]]},{"n":"br","l":" | ","a":[["class","calibre-nuked-tag-article"]]},{"n":"a","x":"Menú de sección","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"feed_12/index_u18.html\", \"frag\": \"article_0\"}"]]},{"n":"a","x":"Menú principal","l":" | ","a":[["href","javascript:void(0)"],["data-xQvX3JSyyUS4yAvbblzwf5","{\"name\": \"index_u63.html\", \"frag\": \"feed_12\"}"]]}]}]}]},"ns_map":["http://www.w3.org/1999/xhtml"]}