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Gamers Nexus has a "movie" coming re: Nvidia GPU smuggling into China

X

Xebec

Well-known member
A few take-aways:

- Movie coming out August 15th
- Gamers Nexus spent over $100K traveling/researching/recording sources on GPU smuggling into China and the GPU black market
- The owner says he was detained for questioning by a government for an extended period of time
- It looks like multiple Chinese people in the semiconductor supply chain are on record indicating Nvidia is aware "blind eye but they know" of the smuggling
- A clip seems to show Gamers Nexus actually buying a GPU on the Chinese black market, or attempting to
- The movie will include the manufacturing of 48GB 4090s in China (the regular 4090s which were banned for export)
- This video looked into the conundrum of "chips that can't be sold in China, despite that the boards using these chips are made in China"

He is running a 'kickstarter' to back-fund the money he spent. Please note this message isn't to encourage spending money on his products -- I am posting this to share here as I think this video/movie release could have an impact on the semi industry..

This is going to be interesting:
 
Xebec said:
- This video looked into the conundrum of "chips that can't be sold in China, despite that the boards using these chips are made in China"
Click to expand...

Yes, USA never prohibited the physical importation of video cards, only "sale," with word sale being interpreted in the most wild traditions of the English common law.

Similarly, it seems that Intel's high end Xeon models are physically passing through China for packaging, and that only came to wider attention when clients were struck by delays during COVID.

I will say it again, non-enforcement of embargoes, and loopholes hidden in wording of the laws follow a long term policy pattern.

America pretended to fight USSR through the cold war, while arming it to the teeth with technology transfers, and machinery. Only in the very late cold war CoCoM sanctions truly came in force, and started to be enacted – Just years prior to USSR's poly-crisis, and collapse. It feels almost as if the crisis was precipitated by the collective realisation by the soviets that they were out of their luck once USA stopped playing games with them, and started to treat them seriously.
 
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Not hard to believe at all. Where there is demand supply will follow and there is no stopping it. Reference the drug trade wordwide.

GPU Smuggling to China: Who, What, Why?​

Criminal Case: ALX Solutions Smuggling Ring​

  • Loophole operation: Two Chinese nationals—Chuan Geng and Shiwei Yang, both age 28—were arrested for allegedly smuggling high-end Nvidia GPUs (like H100, B200, and RTX 4090) from the U.S. to China. They ran a California-based shell company called ALX Solutions, shipping chips via Singapore and Malaysia to obscure their true destination.Reuters+15PC Gamer+15SemiWiki+15

  • Evidence and shipments: Prosecutors tracked over 20 suspect shipments between October 2022 and July 2025. One notable incident involved a $1 million payment from a Chinese company in January 2024.Manufacturing Digital+5Tom's Hardware+5Department of Justice+5

  • Legal ramifications: The defendants face charges under the Export Control Reform Act, which carries a maximum penalty of up to 20 years in prison if convicted.Reddit+10PC Gamer+10New York Post+10

Broader Smuggling Scope​

  • A Financial Times investigation estimated that during a three-month stretch of strict U.S. export restrictions, approximately $1 billion worth of NVIDIA AI chips were smuggled into China. The smuggled hardware comprised cutting-edge models like B200, H100, and H200—often sold on the black market for around $489,000 each, around a 50% premium.PC Gamer+15PC Gamer+15The Times of India+15

  • Underground repair industry: In Shenzhen, repair shops clandestinely service these restricted GPUs—like the H100 and A100—repairing as many as 500 units per month, with repair costs ranging from $1,400 to $2,800 each. While these operations skirt legality, having banned chips serviced isn't itself illegal in China, leading firms to operate discreetly.Tom's Hardware+2Reuters+2

U.S. Countermeasures​

  • Due to the persistent smuggling (estimated over $1 billion worth of chips in just a few months), the White House is exploring new export controls, such as embedding tracking technology directly into AI chips (either software or hardware-based), to help detect unauthorized transfers—even detecting location or usage without traditional GPS.The Washington Post+13Tom's Hardware+13AInvest+13

  • Nvidia itself strongly denies malfeasance, stating that smuggled products receive no official support, services, or updates—and that they adhere strictly to export regulation compliance.The Times of India+3Manufacturing Digital+3Reuters+3
 
Paul2 said:
America pretended to fight USSR through the cold war, while arming it to the teeth with technology transfers, and machinery. Only in the very late cold war CoCoM sanctions truly came in force, and started to be enacted – Just years prior to USSR's poly-crisis, and collapse. It feels almost as if the crisis was precipitated by the collective realisation by the soviets that they were out of their luck once USA stopped playing games with them, and started to treat them seriously.
Click to expand...

I would like to read a little more about this, what kind of military technology did the US transfer to the USSR during the cold war?
 
There used to be fairly open trade relations with the Soviets until the Berlin blockade. But they really started turning the screws when the Soviets invaded Afghanistan back when Carter was president.

I would not say the Soviets were hopelessly behind technologically.

In jet engines and fighter aircraft they were pretty much on par, maybe with a lag of 10 years in transport aircraft.
In the nuclear power sector their reactor technology was on par, and in enrichment technology they were actually ahead of the West and the Russians still are.

It was in semiconductors the Soviets were the most behind. They were still using contact lithography to the end. They did not have something like the Micralign. So their yields were horrible. This meant while some relatively advanced chips could be made it would be too expensive to produce in large numbers.
 
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Xebec said:
I would like to read a little more about this, what kind of military technology did the US transfer to the USSR during the cold war?
Click to expand...

USA was the biggest supplier of Soviet metallurgical industry, as well as the supplier of computers, telecom items. American companies were consultants on Soviet energy, and infrastructure projects, if not actual contractors. Honeywell, and IBM left their trace all around the Soviet military–industrial–complex, and extractive industries. https://www.cia.gov/readingroom/docs/DOC_0000307809.pdf

USSR was existentially dependent on Western manufacturing equipment, as a country being hermetically sealed from the rest of the world for half a century. They basically missed every big thing in the industry in those 50 years – all of the late industrial revolution, and they had to either spy it or import it, as they didn't have even the basic understanding of how those machines worked. For some years, Soviets believed that findings in Western solid state physics journals were a deliberately placed disinformation until semiconductor devices became widely available.

If USA really wanted it, they could have had USSR shut down easily up until mid-cold-war, and the USSR would not have had any industry as such. All major wins of USSR: oil, steel, electric power wouldn't be impossible, if not for USA serving them on a golden platter. Up until mid-seventies, there was really no such strong and dreaded realisation of USSR being an imminent threat. Western nations were more busy fighting for their former colonial possessions than dealing with the threat right under their nose.

Why the West did such an insanity? That's a question more philosophical, than it is political.

One theory is that Western elites dismissively believed that "we can just shut them down any time we want," and only after the shock of Vietnam, did they start to notice "huh, when did Soviets built all those tanks," and the terrifying realisation that they can actually use them came to them only then. Prior to that, USSR was though of as a convenient boogieman, not unlike North Korea was before it detonated its hydrogen bomb to the surprise of everyone.
 
Daniel Nenni said:
Not hard to believe at all. Where there is demand supply will follow and there is no stopping it. Reference the drug trade wordwide.

GPU Smuggling to China: Who, What, Why?​

Criminal Case: ALX Solutions Smuggling Ring​

  • Loophole operation: Two Chinese nationals—Chuan Geng and Shiwei Yang, both age 28—were arrested for allegedly smuggling high-end Nvidia GPUs (like H100, B200, and RTX 4090) from the U.S. to China. They ran a California-based shell company called ALX Solutions, shipping chips via Singapore and Malaysia to obscure their true destination.Reuters+15PC Gamer+15SemiWiki+15

  • Evidence and shipments: Prosecutors tracked over 20 suspect shipments between October 2022 and July 2025. One notable incident involved a $1 million payment from a Chinese company in January 2024.Manufacturing Digital+5Tom's Hardware+5Department of Justice+5

  • Legal ramifications: The defendants face charges under the Export Control Reform Act, which carries a maximum penalty of up to 20 years in prison if convicted.Reddit+10PC Gamer+10New York Post+10

Broader Smuggling Scope​

  • A Financial Times investigation estimated that during a three-month stretch of strict U.S. export restrictions, approximately $1 billion worth of NVIDIA AI chips were smuggled into China. The smuggled hardware comprised cutting-edge models like B200, H100, and H200—often sold on the black market for around $489,000 each, around a 50% premium.PC Gamer+15PC Gamer+15The Times of India+15

  • Underground repair industry: In Shenzhen, repair shops clandestinely service these restricted GPUs—like the H100 and A100—repairing as many as 500 units per month, with repair costs ranging from $1,400 to $2,800 each. While these operations skirt legality, having banned chips serviced isn't itself illegal in China, leading firms to operate discreetly.Tom's Hardware+2Reuters+2

U.S. Countermeasures​

  • Due to the persistent smuggling (estimated over $1 billion worth of chips in just a few months), the White House is exploring new export controls, such as embedding tracking technology directly into AI chips (either software or hardware-based), to help detect unauthorized transfers—even detecting location or usage without traditional GPS.The Washington Post+13Tom's Hardware+13AInvest+13

  • Nvidia itself strongly denies malfeasance, stating that smuggled products receive no official support, services, or updates—and that they adhere strictly to export regulation compliance.The Times of India+3Manufacturing Digital+3Reuters+3
Click to expand...

www.justice.gov

Two Chinese Nationals Arrested on Complaint Alleging they Illegally Shipped to China Sensitive Microchips Used in AI Applications

Two Chinese nationals – one of them an illegal alien – have been arrested on a federal criminal complaint alleging they knowingly exported to China tens of millions of dollars’ worth of sensitive microchips used in artificial intelligence (AI) applications.
www.justice.gov www.justice.gov
 
Paul2 said:
USA was the biggest supplier of Soviet metallurgical industry, as well as the supplier of computers, telecom items. American companies were consultants on Soviet energy, and infrastructure projects, if not actual contractors. Honeywell, and IBM left their trace all around the Soviet military–industrial–complex, and extractive industries. https://www.cia.gov/readingroom/docs/DOC_0000307809.pdf

USSR was existentially dependent on Western manufacturing equipment, as a country being hermetically sealed from the rest of the world for half a century. They basically missed every big thing in the industry in those 50 years – all of the late industrial revolution, and they had to either spy it or import it, as they didn't have even the basic understanding of how those machines worked. For some years, Soviets believed that findings in Western solid state physics journals were a deliberately placed disinformation until semiconductor devices became widely available.

If USA really wanted it, they could have had USSR shut down easily up until mid-cold-war, and the USSR would not have had any industry as such. All major wins of USSR: oil, steel, electric power wouldn't be impossible, if not for USA serving them on a golden platter. Up until mid-seventies, there was really no such strong and dreaded realisation of USSR being an imminent threat. Western nations were more busy fighting for their former colonial possessions than dealing with the threat right under their nose.

Why the West did such an insanity? That's a question more philosophical, than it is political.

One theory is that Western elites dismissively believed that "we can just shut them down any time we want," and only after the shock of Vietnam, did they start to notice "huh, when did Soviets built all those tanks," and the terrifying realisation that they can actually use them came to them only then. Prior to that, USSR was though of as a convenient boogieman, not unlike North Korea was before it detonated its hydrogen bomb to the surprise of everyone.
Click to expand...
Interesting PDF

I do know there's a theory that the Soviet economy never really recovered from WW2 and the economic ties starting in the 1970s and the backward nations status vs. the West kinda shows some of that too.

Any insanity after WW2 (which was already insane) was probably due to a combination of political and economic conisderations - especially as lobbying and personal interest in the federal government started to go crazy in the early 20th century. Also, the Soviets had less need for industrialization than the US - they had a captive workforce...
 
Xebec said:
Also, the Soviets had less need for industrialization than the US - they had a captive workforce...
Click to expand...

Soviets' need was very well defined as a war preparation. They did not develop any industries except ones needed to make tanks. They were people of extremely one-dimensional thinking: what do you need to win a war? Weapons. What do you need to make weapons? Steel. How much? As much as physically possible.

The advantage reached 2:1 in WP's favour by 1975, and kept increasing rapidly.

They were realistically expecting a victory, but they weren't realistically expecting a transistor. And they didn't because they didn't know what transistor is, and therefore did not realise what it can do, until it was too late. And they did not notice the transistor in time, and what it can do because they had no need for radio, videogames, and entertainment.

All those miracle weapons like M270, M1, F22, F117, Patriot, Bonus, Styx and Javelin came as a part of the same wave of technological development that tried to leverage Western technologic superiority vs. brute force, and quantity. They were a part of the strategic shift that came from realisation that it's futile to try to compete on raw numbers with a country sized weapon factory without becoming the same.

-------

P.S. Ironically, Soviets venture into "weird weapons" during the early Cold War was coming from an exactly same realisation, as they knew that in reality they had no robust industry to pump missiles like sausages, and they needed "curveballs" like ground effect vehicles, and tanks that shot missiles instead of shells to throw Western strategic calculations into disarray.
 
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Smuggling is already a big blow to Chinese AI company.
1,The smuggling fee is close to 100% now.
2, You can't build a 100K data center with smuggling GPUs.


Smuggling hits the Chinese IC indurstry in many ways:
1, You have to do everything with double cost.
2, China can't build GPGPU chain in local since the smuggled GPU is still cheaper with double price.
3. Huawei now had 7 fabs, if there's no smuggling, it will help Hwawei a lot.
 
DanX said:
Smuggling hits the Chinese IC indurstry in many ways:
1, You have to do everything with double cost.
2, China can't build GPGPU chain in local since the smuggled GPU is still cheaper with double price.
3. Huawei now had 7 fabs, if there's no smuggling, it will help Hwawei a lot.
Click to expand...

Trust me, smuggling will NOT affect Chinese GPU development (especially Huawei)in any way，if you know how procurement in China works. Huawei will not have any problem of finding customers , if Chinese gov tells SOE and private companies to prioritize purchase Huawe chips.

China never have to ban foreign products in certain sector in order to develop that sector.
 
tonyget said:
Trust me, smuggling will NOT affect Chinese GPU development (especially Huawei)in any way，if you know how procurement in China works. Huawei will not have any problem of finding customers , if Chinese gov tells SOE and private companies to prioritize purchase Huawe chips.

China never have to ban foreign products in certain sector in order to develop that sector.
Click to expand...
100% agree. Very good point to debunk noises about banning certain technology is the reason for China internal development.
 
Paul2 said:
China doesn't have the videogaming industry to sustain GPU development. They don't play GPU demanding shooters.
Click to expand...

Ever heard of "Black myth wukong"？

China is THE largest video game market in the world，bigger than the US


2025-08-11T02-36-32.569Z.png
 
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