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

Nvidia’s AI chips, even with U.S. export restrictions, are more affordable to rent in China than in the U.S.

Chinese cloud providers are offering Nvidia’s A100 chips for as low as $6 per hour, while U.S. providers charge about $10 per hour for the same service.

What’s Going On?

Even though the U.S. has strict export controls to limit China’s access to advanced chips, Chinese companies are still renting Nvidia’s AI chips at lower prices. According to a report from the Financial Times, small Chinese cloud companies rent servers equipped with Nvidia A100 processors for about $6 per hour. In the U.S., renting similar servers costs around $10 per hour.

Larger Chinese companies, like Alibaba and ByteDance, charge higher prices, closer to what global providers offer, but they still compete with big names like Amazon Web Services (AWS), which charges anywhere from $15 to $32 per hour.

How Are Nvidia Chips Reaching China?

Despite a U.S. ban on exporting A100 chips to China since late 2022 and restrictions on the H100 model, Chinese companies are still managing to get these chips through unofficial channels. These chips are being smuggled into China from countries like Japan, Malaysia, and Indonesia. They are even being sold on e-commerce sites like Xiaohongshu and Taobao.

A Chinese startup founder shared with the Financial Times that the Nvidia chips they purchased were smuggled from Japan, with the serial numbers removed to hide their origin.

Nvidia insists that it only sells its processors to trusted partners and follows U.S. export laws. However, once the products reach international markets, it becomes harder to control how they are distributed, leading to these unofficial “gray markets.”

Nvidia’s Problems at Home

In addition to dealing with international challenges, Nvidia is also facing a domestic investigation in the U.S. The Department of Justice has recently stepped up its probe into Nvidia’s dominance in the AI chip market, raising concerns about possible anti-competitive behavior.

This investigation has caused Nvidia’s stock prices to fluctuate, adding more uncertainty to the company’s future as it continues to grow globally.