US Allows Nvidia to Sell AI Chips to Shell Chinese Company

Approximately 600,000 Nvidia H200 chips are stored in Hong Kong, awaiting permission from Beijing authorities to be shipped to the Chinese mainland. Despite high demand for advanced artificial intelligence processors from technology companies, the Chinese government has yet to grant authorizations for large import volumes.

This hesitation from Beijing reflects a concern about technological dependence on the United States. However, Chinese companies need these Nvidia chips to meet the growing need for computing power.

In recent months, there have been approvals for the entry of some H200 units. Sources informed to Reuters indicated that major Chinese internet corporations received about 10,000 chips each. Additionally, small quantities also arrived in the country through indirect routes and intermediaries.

Although the H200 is not Nvidia's latest AI processor, it possesses capabilities that current Chinese solutions have not yet matched. This chip is particularly valuable for training AI models when used in conjunction with the manufacturer's provided software.

The restricted supply is directly linked to export controls implemented by the United States since 2022, which limit Chinese access to advanced Nvidia chips and the equipment necessary for their production. With fewer units accessible through official channels, buyers have turned to the parallel market, resulting in price increases.

At the end of October, servers equipped with these processors were sold in mainland China for prices close to US$ 900,000, which is equivalent to approximately R$ 4.95 million, according to an individual familiar with the matter.

Restrictions on chips are part of a broader trade dispute between the United States and China. Washington had vetoed the export of the H200 to the Chinese market, but the Donald Trump administration changed this policy the previous year, allowing Nvidia to sell the processors to pre-approved Chinese clients after bilateral negotiations.

In May, Reuters reported that the United States had approved sales to ten Chinese companies, including Alibaba, Tencent, and ByteDance. However, Beijing imposed its own restrictions on imports.

In July, The Information reported that Chinese authorities signaled to companies such as Alibaba, ByteDance, and DeepSeek the possibility of acquiring limited volumes of H200 to train AI models. According to the publication, the total number of approvals could be less than 200,000 units. Furthermore, the government wanted these companies to prioritize the use of domestic processors for the inference phase of AI models.

Even with the search for alternatives, new orders for Nvidia products continued. A Reuters report from October showed that ByteDance, Alibaba, and Tencent ordered more than 3 million RTX Pro 5500 graphics cards. This model is less powerful and complies with U.S. export regulations, with a combined list price of the orders exceeding US$ 35 billion.

Moonshot AI, a Chinese startup responsible for developing the Kimi artificial intelligence models, has initiated negotiations to rent computational capacity in data centers located in Europe. These data centers are equipped with advanced Nvidia chips, including the Blackwell systems, whose direct export to China is prohibited by the United States.

According to information obtained by CNBC, the Chinese company plans to gain access to these components remotely, using cloud computing services. This mode of access still has gaps in American legislation.

Four individuals with knowledge of the matter informed CNBC that Moonshot has been in discussions throughout this year with companies known as neoclouds. These companies offer the rental of processing power on cloud infrastructure containing Nvidia GPUs, allowing clients to use the chips without needing to install them in their own data centers.

During the conversations, the Chinese company expressed great interest in leasing cluster capacity that has eight or more Blackwell GPUs installed in Europe. The purpose of this move is to increase access to the computational power necessary to operate its AI models. Two sources cited by CNBC specified that the equipment usage would be for inference, the phase in which models process data and respond to user requests. One of these sources also mentioned interest in capacity for model training.

One informant described the search for these resources as 'very aggressive.' This move comes after the White House declared in July that Moonshot had managed to access Blackwell chips remotely through an installation in Thailand. People familiar with the topic indicated that discussions about renting capacity in European data centers only began after this official declaration.

The interest shown by Moonshot also points to a fragility in U.S. export control policy. Although American regulations restrict the direct shipment of the most sophisticated Nvidia chips to China, current legislation does not grant regulatory bodies sufficient authority to monitor remote access to these components when they are hosted in cloud computing services located in other countries.

Founded in 2023 and headquartered in Beijing, Moonshot AI is among the leading Chinese developers of artificial intelligence models. In July, the company launched Kimi K3, a model that, according to the company itself, reduced the gap compared to systems from Anthropic and OpenAI. This tool has established itself as a lower-cost option compared to American solutions.

The growing demand has put pressure on the company's infrastructure, leading it to temporarily suspend new registrations to prioritize existing users. In a post made on LinkedIn, the company announced that it would be 'adding capacity as quickly as possible and will reopen slots for new subscriptions in batches.'

The demand for processing is also reflected in the commercial terms discussed. In this market, clients usually make an advance payment of a portion of the total contract value to secure access to the infrastructure. A CNBC source reported that it was suggested that Moonshot make an initial payment between 30% and 50% higher than that of a non-Chinese client. Agreements concluded with Chinese companies may result in higher initial values, as cloud operators and investors seek to protect themselves against a potential future ban on remote access.

The possibility of Chinese corporations using American chips through foreign structures is at the heart of regulatory discussions in Washington. Lawmakers have introduced the Remote Access Security Act (RASA), a bill aimed at expanding export controls to cover remote access to strategic equipment and software via cloud services. Although this proposal was approved by the House of Representatives in January, it is still awaiting approval in the Senate.

US agencies are conducting an investigation into a suspicious network involved in smuggling advanced AI chips into China. The investigation also examines aspects of espionage and the collection of confidential commercial information for Beijing.

This investigation has drawn attention to the connection between Nvidia CEO Jensen Huang and individuals under scrutiny. At the center of attention is Alice Huang, also known as Huang Le, a Chinese businesswoman associated with the Singapore-based data center company MegaSpeed.

According to The New York Times, she is suspected of collecting commercial information for China, and reports have emerged about her close relationship with Jensen Huang. Alice Huang is a Chinese citizen and previously worked at MegaSpeed, based in Singapore, as a senior executive director.

Although little is known about her personal life or early career, her professional position placed her at the epicenter of the global AI chip supply chain. MegaSpeed acquires computing equipment running on Nvidia chips and acts as an intermediary, leasing data center capacity to various Chinese tech giants, including Alibaba.

US authorities are determining whether companies operating through Southeast Asia helped Chinese businesses circumvent restrictions on advanced AI chips. This raises questions about the business model itself. During the investigation, Alice Huang held the position of senior executive director at MegaSpeed. Through her position and interaction with Nvidia, she came into contact with CEO Jensen Huang.

It is reported that the US had already suspected her of assisting in the smuggling of Nvidia chips into China, after which she was placed under surveillance.