China: Demand for semiconductors leads to smuggling of Nvidia cards
In China, the hunger for powerful processors for the development of creative AI is becoming significant, as reported by SCMP , to the point of pushing for a real smuggling of the most powerful processors, such as Nvidia GPU cards.
A Shanghai-based semiconductor engineer named Tang said that smuggling GPUs has become a quick way to make a lot of money, due to strong domestic demand for Nvidia's A100 and H100 GPUs. Tang is among thousands of unofficial intermediaries sourcing Nvidia's high-end GPUs to meet the demand of various Chinese tech companies that are developing services similar to ChatGPT, i.e. creative AI. On social media platform Douyin, China's version of TikTok, several vendors offer Nvidia GPUs, though it's hard to verify if they have access to the much-sought-after A100 and H100 products.
A salesman in Shenzhen's Huaqiangbei subdistrict, home to the world's largest electronics wholesale market, said he managed to secure Nvidia's A100 and asked for 128,000 yuan ($17,709), higher than the suggested price. from the manufacturer about $10,000.
Some modified A100 GPUs are available for between 80,000 and 90,000 yuan, according to vendor Huaqiangbei who declined to be identified. The vendor has, however, indicated that it would be "very difficult, if not impossible" to get a set of eight genuine A100 GPUs for a high-performance server system. An indication that the offer is still sporadic and linked to smuggling.
According to Nvidia's website, the A100 Tensor Core GPU powers the world's leading data centers used for AI, data analytics and high-performance computing applications and is used to accelerate the large language models that underpin the applications of conversational artificial intelligence. Language models are the foundation of creative AI.
On e-commerce giant JD.com's platform, an authorized reseller of Nvidia listed the company's 80-gigabyte A800 GPU priced at 88,999 yuan, while the 80G A100 was priced at 99,999 yuan, but was exhausted. The 800 model is officially allowed for export to China because it is inferior in performance to the original A100. Likewise, the export of the H800 graphic model is authorized, with performance lower than the original H100 model.
The fact that smuggling is used indicates that in China there are no models up to the Nvidia ones and this explains why there is this parallel import, if not actual smuggling.
Shanghai-based Iluvatar Corex said last September that it has the only domestically mass-produced GPU, the Tiangai 100, used for cloud computing applications. However, the major technology companies in the country continue to bet on Nvidia products. TikTok and Douyin owner ByteDance, for example, reportedly ordered $1 billion worth of Nvidia GPUs this year.
Last week Reuters first reported on China's burgeoning underground market for Nvidia GPUs.
Tang, the Shanghai-based broker for smuggled Nvidia GPUs, said the A100 can now easily be sold for between 130,000 and 150,000 yuan in the Yangtze River Delta, where many AI startups operate. “Training an AI system is just the beginning,” Tang said. “If companies want to deliver services based on large language models, they will need even more computing power.”
Large language models (LLMs) are deep learning AI algorithms that can recognize, summarize, translate, predict, and generate content using very large datasets. They represent technology used to train AI chatbots such as OpenAI's ChatGPT, backed by Microsoft.
According to Tang, Nvidia's A800 chips have been purchased en masse by several Chinese Big Tech companies in recent months, which has led to a shortage in the local market. This, in turn, has further increased the prices of A100 and H100 GPUs purchased from unofficial channels. Tang said two of his customers had to pay more than 1 million yuan upfront to secure delivery of the next shipment of A800 GPUs. “First pay, first served,” he said.
According to TrendForce, development of Baidu's ChatGPT-alternative Ernie Bot, originally built on servers using Nvidia's A100 GPUs, moved to the A800 due to US export controls. According to TrendForce projections, demand for Baidu's AI servers, for Ernie Bot and other applications, will reach approximately 2,000 this year. However, the performance of the A100 and H100 is tempting and developers are willing to pay significant sums just to have them.
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The article China: Semiconductor Demand Leads to Nvidia Card Smuggling comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-la-domanda-di-semiconduttori-porta-al-contrabbando-di-schede-nvidia/ on Wed, 28 Jun 2023 10:00:45 +0000.