NVIDIA is at the center of the technological war between China and the United States. After the blockadethe US allowed the company sell a version of its H20 chips specific for the Chinese market, but the most powerful chips, The Blackwells are still banned in China. Or so we believed.
What is happening. Donald Trump made it clear that he does not want China to have access to Blackwell chips, but despite the blockade, an investigation by the Wall Street Journal shows how there are Chinese companies benefiting from the computing power of these chips using legal shortcuts.
The process. The investigation details the process that NVIDIA’s Blackwell chips go through until INF Tech, a Shanghai-based startup, uses the computing power.
- NVIDIA sells its chips to Aivres: Aivres is a Silicon Valley company partially owned by Inspur, a Chinese company that is on the US blacklist. NVIDIA could not do business with Inspur or its partners, but the blockade does not affect partners based in the US, as is the case with Aivres.
- Aivres sells the chips to Indonesia: specifically to an Indonesian communications provider called Indosat Ooredo Hutchison. The agreement includes the sale of 32 NVIDIA GB200 racks with 72 Blackwell chips each; more than 2,300 chips worth $100 million.
- Indonesia sells computing power to China: The end customer for this cloud computing power is INF Tech, which will use it to train AI in financial and medical research applications. This point is key as we will see later.
Why it is important. The investigation calls into question the true effectiveness of US blockades and regulations. Using intermediaries in other countries, Chinese companies can manage to circumvent the restrictions and access the most powerful chips, all without violating the restrictions.
Cracks. According to the Trump administration’s controls, the deal is legal as long as INF Tech does not use the chips to help the government with military intelligence applications or to develop weapons. However, it is difficult to know what it is actually being used for and in fact in the US there are suspicions that The Chinese government is leaning on the private sector to improve its military technology.
Disagreement. If there is a crack, the logical thing would be to cover it. The Biden administration tried to tighten these rules to prevent chips from being sold to countries that are not close allies of the United States. This would have prevented the sale to the Indonesian company, but when Trump returned to power he decided not to go ahead with these new rules. Instead of the government controlling it, it should be the companies themselves.
Interests. The US blockades seek to take advantage of China in the AI technological race, all for reasons of “national security.” It is contradictory that they leave these cracks open through which these chips end up sneaking in legally. The one who thinks it’s great is NVIDIA. Speaking to the Wall Street Journal, a company spokesperson came out in favor of Trump’s decision, saying that “Biden’s controls cost taxpayers tens of billions, paralyzed innovation and ceded ground to foreign rivals.”
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