Nvidia AI chips: demand for repairs of products blocked by US tariffs grows in China.
Chinese companies are creating a market for repairing H100 and A100 GPUs, which are prohibited from being exported to Washington's rivals.
BEIJING/SHANGHAI, July 25 (Reuters) - Demand in China has begun to increase for a business that, in theory, shouldn't exist: the repair of Nvidia's advanced video cards (NVDA.O), artificial intelligence chipsets whose export to its commercial and technological rival has been banned by the US.
About a dozen specialized companies now offer repair services, according to two of these companies in Shenzhen's technology hub, which say they mainly repair Nvidia H100 graphics processing units (GPUs) that somehow ended up in the country, as well as A100 GPUs and a variety of other chips.
Even before its launch, the sale of the H100 in China was banned in September 2022 by US authorities, interested in controlling Chinese technological development, especially advancements that could be used by their armed forces. Its predecessor, the A100, was also banned around the same time, after more than two years on the market.
"There is a really significant demand for repairs," said a co-owner of a company that has been repairing Nvidia gaming GPUs for 15 years and began working on AI chips in late 2024.
Business has been so good that the owners created a new company to handle these orders, which now repairs up to 500 Nvidia AI chips per month. Its facilities, as shown in social media ads, include a room with capacity for 256 servers, simulating clients' data center environments to perform tests and validate repairs.
The rapid growth of the repair sector since the end of last year corroborates the idea that there was significant smuggling of Nvidia chipsets into China. Tenders showed that the government and military purchased the banned AI chips from the American company.
Concerns about the large-scale smuggling of Nvidia's cutting-edge products to China have led Republican and Democratic lawmakers to introduce bills that would require chipset tracking so their location can be verified after sale. The administration of US President Donald Trump also supported the idea this week.
The thriving repair sector also highlights how Nvidia's advanced GPUs remain in high demand, despite newer, albeit less powerful, products from Chinese tech giant Huawei (HWT.UL).
Although the purchase, sale, and repair of Nvidia GPUs is not illegal in China, the sources for this article were reluctant to attract the attention of American or Chinese authorities and did not want to be identified.
Nvidia cannot legally provide repair or replacement parts for restricted products in China. Conversely, sources said that if an Nvidia GPU in another country malfunctions and is under warranty, which is typically three years, the company usually replaces it.
An Nvidia spokesperson stated that only the company and its authorized partners "are capable of providing the service and support that customers need. Using restricted products without approved hardware, software, and technical support is unfeasible, both technically and economically."
The demand for repairs may not decrease.
Nvidia has just received authorization to resume sales of its H20 AI chipset, developed specifically for China, in compliance with US restrictions. Switching to H20 chipsets, however, is not necessarily a simple or good option for Chinese companies.
Price is a problem, as an H20 server with eight GPUs internally will likely cost more than 1 million yuan (US$139.400), according to industry sources. H20 chipsets, which have higher memory bandwidth, were specifically designed for AI inference work, but companies involved in training large language models would likely prefer H100 chipsets, which are better suited for that task.
Industry sources said that some of the H100 and A100 GPUs in China have been processing data 24/7 for years, leading to increased failure rates. Depending on usage frequency and GPU maintenance, an Nvidia GPU typically lasts two to five years before needing repairs, they said.
According to the first source, his company charges between 10.000 yuan and 20.000 yuan (US$1.400 to US$2.800) to repair a GPU, depending on the complexity of the problem.
The second Shenzhen-based repair service provider – which switched from GPU rental to repairs this year – says it can repair up to 200 Nvidia AI chips per month, charging about 10% of the GPUs' original sale price per repair.
Services typically include software testing, fan repair, diagnosis and repair of printed circuit board and GPU memory faults, as well as replacement of broken parts.
Meanwhile, the smuggling of high-end Nvidia chips continues. Chip traders in China claim that customer demand is shifting towards the high-end B200 chips, which Nvidia began shipping to other countries in larger quantities this year.
A server with eight B200 GPUs costs more than 3 million yuan in China, they said.
(US$ 1 = 7,1724 Chinese yuan)
Reporting by Che Pan in Beijing and Casey Hall in Shanghai; Additional reporting by Stephen Nellis in San Francisco; Editing by Anne Marie Roantree and Edwina Gibbs
