Catch Of The Day: Are Chinese Smugglers Hiding NVIDIA Chips With Live Lobsters?
Butter. Corn on the cob. Potatoes. White wine. These are all things that pair nicely with lobster. But chips? Not so much, though when it comes to the non-edible variety (you know, semiconductors), there's a report claiming that smugglers are using live lobsters to sneak NVIDIA's AI chips into China. Is this really happening, though? It all depends on who you ask.
What this all boils down to (pun intended) is a set of export restrictions on certain semiconductor hardware to China, and especially as it pertains to artificial intelligence. NVIDIA has established itself as a dominant market leader in AI hardware with its advanced GPUs and other silicon, and also its software tools. The red hot demand for AI helped fuel a greater than 2X gain in NVIDIA's annual revenue, which as reported last quarter, shot up 114% to $130.5 billion (versus $60.2 billion for the previous year).
The U.S.-imposed export restrictions prevents NVIDIA from shipping certain chips to China, including some consumer parts like its flagship gaming GPU, the GeForce RTX 5090 and the previous generation GeForce RTX 4090. To get around this, NVIDIA made available gimped versions—GeForce RTX 5090D and GeForce RTX 4090D—for the Chinese market.
More recently, the Trump administration has engaged in a sort of tariffs war with China, which is being hit the hardest with much higher tariffs than before (though it's not the only place were tariffs have gone up quite a bit). And according to a report by Anthropic, an AI startup founded in 2021, "China has established sophisticated smuggling operations."
The site claims China has smuggled in hundreds of millions of dollars worth of chips (though it doesn't provide a time frame), and has done so in some unique ways.
"In some cases, smugglers have employed creative methods to circumvent export controls, including hiding processors in prosthetic baby bumps and packing GPUs alongside live lobsters. Chinese firms continue to establish shell companies in third countries at a rapid pace to evade export controls," Anthropic states.
It's not hard to believe that smugglers would resort to such unusual methods, given past reports. In 2022, for example, Chinese authorities reportedly busted a woman pretending to be pregnant for hiding hundreds of Intel Alder Lake CPUs and Apple iPhones into China.
As for using live lobsters, Anthropic's claims is likely rooted in a 2023 report where it's said that Hong Kong authorities discovered an alleged smuggling operation consisting of vans packed to the gills with live lobsters and dozens of "high-value" graphics cards.
In a statement provided to CNBC, a spokesperson for NVIDIA sort of denied that this is happening, or still happening.
"American firms should focus on innovation and rise to the challenge, rather than tell tall tales that large, heavy, and sensitive electronics are somehow smuggled in ‘baby bumps’ or ‘alongside live lobsters,’ " the spokesperson said.
Whether that comes off as a denial or deflection is up for debate. One thing is for sure though—this editor suddenly has a hankering for baked, stuffed lobster.
