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The cost of renting cloud services using Nvidia's leading AI chips is lower in China than within the U.S., an indication that the subtle processors are easily entering the Chinese market despite Washington's export restrictions.
Four small Chinese cloud providers are charging local technology firms around $6 an hour to make use of a server with eight Nvidia A100 processors in a basic configuration, firms and customers told the Financial Times. Small cloud providers within the US are charging around $10 an hour for a similar configuration.
According to experts within the AI and cloud industry, the low prices indicate an abundant supply of Nvidia chips in China and a circumvention of US measures designed to forestall access to cutting-edge technologies.
The A100 and the also available H100 are amongst Nvidia's strongest AI accelerators and are used to coach the massive language models that power AI applications. The Silicon Valley company has been banned from shipping the A100 to China since fall 2022 and has never been allowed to sell the H100 within the country.
Chip resellers and tech startups said the products are relatively easy to acquire. Stocks of the A100 and H100 are openly offered on the market on Chinese social media and e-commerce sites corresponding to Xiaohongshu and Alibaba's Taobao, in addition to electronics marketplaces, at slight premiums to overseas prices.
China's larger cloud operators corresponding to Alibaba and ByteDance, known for his or her reliability and security, charge twice to 4 times the worth of smaller local providers for similar Nvidia A100 servers, in accordance with pricing information provided by the 2 operators and customers.
After discounts, each Chinese tech giants offer packages at prices comparable to Amazon Web Services, which charges between $15 and $32 per hour. Alibaba and ByteDance didn’t reply to requests for comment.
“The big players need to worry about compliance, in order that they're at an obstacle. They don't wish to use smuggled chips,” said a Chinese start-up founder. “Smaller suppliers are less concerned.”
He estimated that there are greater than 100,000 Nvidia H100 processors within the country due to their widespread use out there. The Nvidia chips are each in regards to the size of a book, making them relatively easy for smugglers to bring across borders, undermining Washington's efforts to curb China's AI advances.
“We bought our H100s from an organization that smuggled them in from Japan,” said an automation startup founder who paid about 500,000 RMB ($70,000) for 2 cards this yr. “They etched away the serial numbers.”
Nvidia said the corporate sells its processors “primarily to well-known partners … who work with us to be sure that all sales comply with U.S. export control regulations.”
“Our used products can be found through many second-hand channels,” the corporate added. “Although we cannot track products after they’re sold, we’ll take appropriate motion if we determine that a customer is violating U.S. export controls.”
The head of a small Chinese cloud provider said low domestic prices helped offset the upper prices vendors paid for smuggled Nvidia processors. “Engineers are low-cost, electricity is affordable and competition is fierce,” he said.
At the Huaqiangbei electronics market in Shenzhen, sellers who spoke to the FT were asking for the equivalent of $23,000 to $30,000 for Nvidia's H100 expansion cards. Online sellers were asking for the equivalent of $31,000 to $33,000.
According to Dylan Patel of SemiAnalysis, Nvidia is charging customers $20,000 to $23,000 for H100 chips after the corporate recently cut prices.
A knowledge center provider in China said servers from Silicon Valley-based Supermicro equipped with eight H100 chips reached a peak selling price of three.2 million RMB after the Biden administration tightened export restrictions in October. He said prices have since fallen to 2.5 million RMB as supply constraints eased.
Several people involved within the trade said traders in Malaysia, Japan and Indonesia often shipped Supermicro servers or Nvidia processors to Hong Kong before taking them across the border to Shenzhen.
The black market trade relies on difficult-to-combat circumvention of Washington's export regulations, experts say.
For example, while subsidiaries of Chinese firms are prohibited from purchasing advanced AI chips outside the country, their executives could start latest firms in countries like Japan or Malaysia.
“It is difficult to totally implement export controls beyond the US border,” said an American sanctions expert. “That is why the regulations require freight forwarders to screen end users, and the Department of Commerce places firms believed to be violating the regulations on the banned company list.”
