Strong demand for AI computing equipment in China has nearly doubled prices for Nvidia's B300 servers to about 7 million yuan ($1 million) each, industry sources said, as a crackdown on chip smuggling dries up black-market supply.

The price surge reflects the intersection of booming Chinese AI demand and tightening U.S. export controls. B300 systems, which previously traded for around 4 million yuan, have become scarce as authorities crack down on the gray market networks that previously circumvented trade restrictions.

Chinese AI companies are scrambling for compute power as they race to build competitive large language models. The shortage is particularly acute for B300 systems, which offer the performance needed for training frontier AI models but fall under export restrictions designed to limit China's AI capabilities.

Previous gray market operations relied on complex routing through third countries and shell companies to move restricted chips into China. Recent enforcement actions have significantly disrupted these networks, creating the supply shortage that's driving current price premiums.

The price explosion demonstrates both the effectiveness of U.S. export controls and the desperation of Chinese AI firms to secure advanced chips. For Nvidia, the premium pricing in China's gray market far exceeds official prices, though the company sees none of the additional revenue due to the nature of these transactions.

The situation highlights the growing costs of technological decoupling. Chinese companies are paying million-dollar premiums for hardware they previously accessed at standard prices, while U.S. chipmakers lose access to their largest potential market. The premium likely reflects both scarcity value and the risks involved in circumventing export controls.