AI chip restrictions spark a thriving black market in Shenzhen
Despite strict U.S. export controls on high-end AI chips, Nvidia processors like the H100 and A100 are quietly flowing into China — and staying operational thanks to a growing underground repair network. In Shenzhen, about a dozen boutique tech firms have carved out a lucrative niche servicing GPUs that technically shouldn’t be in the country at all.
One such shop recently spun off a dedicated repair division, now handling up to 500 graphics units monthly. This surge in demand highlights the enormous appetite for functional AI hardware and the resourcefulness of Chinese firms in sidestepping geopolitical hurdles.
Export bans fail to block supply, only complicate logistics
Even with tighter U.S. restrictions in place, nearly $1 billion worth of Nvidia AI chips entered China in the three months that followed the latest round of curbs, according to the Financial Times. The steady inflow of banned hardware suggests that enforcement gaps remain wide, particularly as Chinese companies ramp up investments in large language models and AI infrastructure.
Many of these chips arrive through indirect channels — routed via intermediaries or labeled under different categories — before ending up in China’s bustling tech hubs like Shenzhen. Once inside the country, the priority is no longer acquisition, but maintenance.
Repair networks become strategic workaround
The emergence of these repair shops does more than extend the life of expensive, hard-to-replace hardware. It also erodes the effectiveness of Western attempts to limit China’s AI progress. By offering ongoing technical support, these service providers enable continued development across China’s AI ecosystem, regardless of supply restrictions.
Analysts warn that these activities effectively dilute the intent of U.S. policy. As one expert noted, every repaired GPU is a restored piece of AI computing power, meaning the impact of sanctions is slowly being reversed from within.
Nvidia chips remain central to China’s AI race
Nvidia remains the undisputed gold standard in AI computing, and Chinese demand shows no signs of slowing. While homegrown alternatives are in development, they have yet to match the performance of Nvidia’s latest offerings.
As long as the supply of fresh chips is uncertain, repairing old ones becomes a strategic necessity. And for Shenzhen’s underground tech economy, it’s a business model that’s proving both resilient and highly profitable.