Nvidia chips are banned in China — but AI engineers have found a way around that

Working with brokers, Chinese AI engineers are using servers that use Nvidia’s AI chips without physically bringing the banned chips into the country, and some are doing so anonymously with cryptocurrency methods, the Wall Street Journal reported.

Derek Aw, a former Bitcoin miner working with Chinese companies to access Nvidia’s (NVDA) computing power, told The Journal he convinced investors in the U.S. and Dubai to help buy AI servers with Nvidia’s H100 chips. Then, Aw’s company placed over 300 of the servers into an Australian data center, which later started powering AI models for a Beijing-based company, according to The Journal.

Despite U.S. efforts to tighten export controls on advanced chipmaking equipment sold to China, the country’s AI firms have reportedly been able to access advanced chips from Nvidia through resellers, and even by renting Nvidia-powered servers from Google $GOOGL (GOOGL), Microsoft $MSFT (MSFT), and other tech firms. Nvidia declined to comment.

Nvidia has designed three chips to comply with existing export controls on China, including the H20. However, analysts at Jeffries said when the U.S. does its annual review of U.S. semiconductor export controls in October, “it is highly likely that” the H20 will be banned for sale to China. Meanwhile, the Biden administration was reportedly considering using an export control called the foreign direct product rule to prevent allies from selling advanced chipmaking equipment to China.

Nvidia is also reportedly working on a version of its latest Blackwell AI platform for the Chinese market that will comply with U.S. trade restrictions. The U.S.-based chipmaker will reportedly work with a local distribution partner, Inspur, to launch and sell the chip, tentatively called the “B20,” in China.

Lawyers told The Journal that buyers, sellers, and brokers involved in accessing banned Nvidia AI chips are not breaking any laws, with cloud companies saying trade restrictions don’t apply to accessing U.S. cloud services. However, the U.S. Commerce Department proposed a rule in January targeting “foreign malicious actors,” aiming to ban them from accessing U.S. cloud computing infrastructure.