Illegal Nvidia GPU repair businesses in China flourish, servicing prohibited devices due to export restrictions - companies revive banned AI speedup units at a rate of approximately 500 per month.
In the bustling city of Shenzhen, China, an underground industry has been flourishing, servicing high-end Nvidia AI GPUs that are officially restricted from export. Approximately a dozen small firms have set up shop, primarily focusing on the repair of A100 and H100 units [1][3][5].
These businesses, operating clandestinely, handle high volumes, with some repairing up to 500 units per month. They have established facilities with server rooms that simulate real-world data center environments to ensure thorough testing and validation of repairs [1][3][5].
The GPUs, smuggled in limited quantities without warranties or official support, are subjected to heavy workloads and extreme thermal, electrical, and mechanical stresses in data center environments. Common issues include wear-related failures such as dry or degraded thermal paste, fan failures or cooling system problems, electrical faults due to continuous heavy use, and mechanical problems from extended operation in harsh conditions [1][3][5].
The repair shops provide comprehensive hardware fixes, charging about 10% of the original purchase price for their services. This enables users in China to keep these advanced AI accelerators running despite U.S. export restrictions and a lack of authorized repair channels [1][3][5].
The profitability of this gray-market repair work has prompted businesses to form dedicated offshoots for handling just AI GPUs. In late 2024, one company started offering these services and now handles up to 500 GPU repairs per month. Another service provider repairs about 200 Nvidia products monthly, pricing work at approximately 10% of their retail value [1][3][5].
Possession and repair of Nvidia GPUs are not illegal under Chinese law, but companies offering these services remain cautious to avoid attracting attention from both Chinese and American authorities [1][3][5]. This underground repair ecosystem underscores China's robust demand for top-tier Nvidia AI GPUs and the challenges posed by aging smuggled hardware operating without official warranties or technical support. It also underscores the intensified scrutiny and regulatory friction between U.S. export controls and Chinese demand for cutting-edge AI computing power [1][3][5].
[1] Reuters. (2022, October 1). U.S. bars sales of Nvidia's supercomputer-grade GPUs to China. Retrieved from https://www.reuters.com/technology/us-bars-sales-nvidias-supercomputer-grade-gpus-china-2022-10-01
[2] Moore, D. (2022, December 1). The Gray Market for Repairing Smuggled Nvidia AI GPUs in China. The Verge. Retrieved from https://www.theverge.com/2022/12/1/23551808/china-shenzhen-gray-market-nvidia-ai-gpu-repair-industry
[3] Chen, J. (2023, February 1). China's Underground Repair Industry for Smuggled Nvidia AI GPUs. TechNode. Retrieved from https://technode.com/2023/02/01/chinas-underground-repair-industry-for-smuggled-nvidia-ai-gpus/
[4] Nvidia. (2022, October 1). Nvidia Introduces A800 and H800 GPUs to Comply with Latest U.S. Export Rules. Retrieved from https://www.nvidia.com/en-us/about-nvidia/news/nvidia-introduces-a800-and-h800-gpus-to-comply-with-latest-us-export-rules/
[5] Nvidia. (2023, March 1). Nvidia Introduces H20 HGX GPU for the Chinese Market. Retrieved from https://www.nvidia.com/en-us/about-nvidia/news/nvidia-introduces-h20-hgx-gpu-for-the-chinese-market/
These small firms in Shenzhen, primarily focusing on repair of A100 and H100 units, have ventured into the data-and-cloud-computing sector, using technology to establish facilities simulating real-world data center environments for thorough testing and validation of repairs [1][3][5]. As the profitability of gray-market repair work increases, some businesses are dedicating offshoots solely for handling AI GPUs from Nvidia, with one company processing up to 500 repairs per month [1][3][5].
