Nvidia says data centers built with smuggled chips are a dead end. The chip giant pushed back after a Financial Times report claimed at least $1 billion worth of Nvidia AI chips landed illegally in China.
The issue started as US export controls blocked Nvidia’s H20 chips to China under Trump-era restrictions. Despite the ban, the FT says Chinese distributors started selling banned B200 chips on the black market to AI data center suppliers in May.
Nvidia told CNBC that unauthorized products don’t get support and trying to build datacenters from smuggled chips "is a losing proposition, both technically and economically." 
Nvidia CEO Jensen Huang recently said sales of the H20 chip to China would resume after regulatory talks. Huang also wants to push more advanced chips to China soon.
Here’s Nvidia on the smuggling situation:
"Trying to cobble together datacenters from smuggled products is a losing proposition, both technically and economically," a spokesperson said.
"Datacenters require service and support, which we provide only to authorized NVIDIA products."
China remains a hot market for chips but complicated by US-China tussles over AI tech and export rules. Nvidia’s rollout of next-gen chips in this geopolitically sensitive showdown is just getting intense.
