NVIDIA CEO Jensen Huang stated at the company's shareholder meeting on June 24 that attempting to build data centers with smuggled chips is 'a dead end,' adding that NVIDIA will not provide any support or repair services for such products. Huang explained that advanced AI data centers require integrated systems including stable hardware, software, network architecture, and long-term maintenance, making smuggled chips without official support effectively isolated components. The statement comes as the U.S. Commerce Department continues to tighten export controls on AI chips to China, forcing Chinese customers to turn to black markets where prices have doubled.
NVIDIA Denies Support for Smuggled Chip Operations
Huang stated that anyone trying to assemble data centers using smuggled products is on 'a dead end.' He emphasized that NVIDIA will not provide any support or repair services for such operations. The CEO explained that advanced AI data centers are not simply hardware fortresses built by stacking chips, but rather comprehensive integrated systems requiring stable and trustworthy hardware, software, network architecture, as well as long-term maintenance, updates, tuning, and technical support. Without official support, smuggled chips remain isolated components even if acquired. Huang also declared that if commercial interests conflict with U.S. national security, NVIDIA will prioritize national security.
U.S. Export Controls Drive China to Black Market Chip Sources
NVIDIA chips have been subject to U.S. export control regulations since 2022, causing the company's China market share to drop from over 90% directly to zero. The U.S. approved H200 chip exports to China, but Chinese authorities blocked market entry to support domestic supply chains. Huang acknowledged that NVIDIA has not received any revenue from such restricted products and remains uncertain whether China will approve imports in the future. Chinese customers unable to access high-end chips through legal channels have turned to black markets, where prices have doubled. The article notes that black market chips lack the complete ecosystem including GPU, CUDA software, data center architecture, system maintenance, technical support, and global engineering services that constitute NVIDIA's competitive advantages.
Taiwan Faces Scrutiny as Potential Chip Transit Point
The Keelung District Prosecutors Office is investigating related chip smuggling cases. The article notes that as high-end chips have become core strategic materials in the U.S.-China technology competition, Taiwan serves not only as a supply chain hub but may also become a pressure point for smuggling, transshipment, origin laundering, and gray market transactions. The article states that Taiwan cannot position itself merely as an observer, as the AI chip conflict exists within gaps in Taiwan's customs, judicial system, supply chain management, and corporate internal controls.
FAQ
What did Jensen Huang say about smuggled chips on June 24?
Jensen Huang stated at NVIDIA's shareholder meeting on June 24 that attempting to build data centers with smuggled chips is 'a dead end' and that NVIDIA will not provide any support or repair services for smuggled products.
Why did NVIDIA's China market share drop to zero?
NVIDIA chips have been subject to U.S. export control regulations since 2022, causing the company's China market share to drop from over 90% directly to zero. Even when the U.S. approved H200 chip exports to China, Chinese authorities blocked market entry to support domestic supply chains.
What chip smuggling investigation is underway in Taiwan?
The Keelung District Prosecutors Office is investigating related chip smuggling cases, highlighting Taiwan's potential role as a transit point for gray market chip transactions amid U.S.-China technology competition.
