U.S. AI Chips Smuggled Into China Despite Export Controls

Advanced AI chips developed by American companies, primarily Nvidia Corporation, continue to be smuggled into China in violation of U.S. export controls. Since August 2022, the United States government has barred Nvidia Corporation from selling its most sophisticated processors to Chinese firms to preserve a critical hardware lead in artificial intelligence.

Despite these restrictions, a black market has emerged to bypass the ban. While China has narrowed the gap with the U.S. in AI software development, the country remains heavily dependent on domestic suppliers for hardware. This reliance persists because American chips currently account for more than 95% of global AI computing power, making the acquisition of U.S. hardware a strategic priority for Chinese entities.