NVIDIA and the New Reality of AI Chip Trade

In December, American tech company NVIDIA – famous for pioneering the graphics processing units (GPUs) behind PC gaming and the AI revolution – introduced location verification technology for its most advanced AI chips. The move aims to reduce the illicit flow of high-performance GPUs into restricted markets, especially China. Indeed, the fast-growing black market in AI chips has transformed these little pieces of silicon into high-value contraband.

Advanced AI chips sit at the centre of global competition. They power large language models, hyperscale data centres, and defence-linked research.

In 2022, the US government imposed export controls to restrict the sale of NVIDIA’s most advanced GPUs to China – including the A100 and H100, which underpin modern AI infrastructure. In response, and to remain compliant with US government export control regulations, NVIDIA introduced lower performance, China-specific variants of these chips.