In Taiwan last October, purchasing agents rushed from one store to another to nab Nvidia’s RTX 4090 graphics card, leaving the shelves bare.
“They are buying these to later resell them to areas that faced U.S. restrictions at a much higher price. They can just carry them to Hong Kong or other Chinese cities.”
Now, similar scenes have been happening over the region, including Singapore, Vietnam, and South Korea. There have been severe shortages of the RTX 4090 in these areas, and prices are as much as 60% higher, when compared with the launch date.
The chip was designed for rendering images and training AI models, and it has become a highly sought after product in Hong Kong and China, especially since the US started restricting shipments to Chinese customers.
The Biden administration brought in exports of certain high-end chips in China back in 2022, in an effort to slow advances in AI.
Nvidia redesigned some of its products (A100 & H100), lowering specifications to comply with the rules, so they could continue doing business in China. 20% of its revenue comes from China.
However, last October, the US updated the rules to include the redesigned chips, which include the A800, H800, and RTX 4090.
Nvidia responded by, once again, redesigning chips to comply with the rules. Currently, these new chips aren’t available on shelves.
US Secretary of Commerce, Gina Raimondo said, “If you redesign a chip … that enables [China] to do AI, I’m going to control it the very next day.”
The RTX 4090 is one of Nvidia’s cheaper and less powerful products, generally available in computer DIY stores and other retailers.
It was intended for gamers and hobbyists, however, due to its AI capabilities, it fell into the crosshairs of US export controls.
It was originally released under a year ago, and came with a price tag of U$1,599 (approx. A$2,429).
The U.S. began weaponising export controls under the Trump administration.
The latest restrictions on AI chips are applying to whole countries rather than individual companies.
Lawyers have said it’s not uncommon for items subject to export controls to arrive in targeted countries through trade diversions.
“Trade diversion and evasion are the key problems right now when it comes to export controls,” said one lawyer.
“It’s clear this is one of the big problems when enforcing export controls, particularly for things like semiconductors, which are incorporated into all manner of end products used around the world and which themselves are small enough to personally hand-carry in small quantities or otherwise smuggle across borders.”
Another lawyer said recent US rules are causing upheaval in the market, as they are spread with little to no advance warning.
“When the government issues our rules, they are replete with loopholes. … The result is that we are increasing compliance costs (workarounds by industry) without truly and effectively curbing tech transfer to adversary nations.”
