According to a fresh report from Reuters, repair shops are a booming business in China as US sanctions constrain the number of NVIDIA GPUs available. NVIDIA's GPUs became one of the most hotly demanded commodities in China after the latest round of sanctions, and with the firm continuing to struggle with supplies and production ramps after securing leeway from the Trump administration, Chinese GPU users are eager to squeeze every bit of performance that they can from their chips.
NVIDIA GPU Repair Shops In China Are A Hot Business After US Sanctions
US sanctions on NVIDIA's GPUs have forced Chinese companies to squeeze out every minute of performance from their existing inventories. As a result, the failure rates of these chips are high, leading to repair shops springing up to cater primarily to the repair of older H100 and A100 GPUs.
Reuters' sources believe that even though the Trump administration has recently relaxed NVIDIA H20 GPU exports to China, Chinese firms are likely to prefer H100 and A100 chips due to their training capabilities. AI development requires software engineers to train the software on existing data sets, and once the training is complete, the AI 'infers' responses to user queries.
While the NVIDIA H100 was banned for sale in China even before it was launched, the fact that repair shops have sprung up for the chip suggests that the chips have been smuggled into China despite the US restrictions.
The repair shops are charging up to $2,400 apiece to repair the GPUs, with some having the capacity to work on 500 chips a month. NVIDIA's warranty policies typically cover failed products, but the US restrictions on China mean that the firm is unable to provide these services in the country.
The US firm's chips are in high demand in China because local companies, primarily Huawei, cannot come up with equivalent or superior alternatives. This inability has played a central role in CEO Jensen Huang's successful effort to convince the Trump administration to remove restrictions on chips headed for Chinese use. Huang argues that depriving China of NVIDIA's GPUs creates the risk of the US ceding a key role in the global AI hardware ecosystem.
Chinese firms also prefer to use the H100 over the H20 due to the former's utility in enabling AI development. Additionally, the demand for the H20 GPUs outstrips NVIDIA's inventory, which isn't expected to stabilize soon, given that the production lines for the GPUs have been repurposed for other chips. Investment bank Jefferies believes that while NVIDIA's H20 inventory could sit at 900,000 units at the very best, the demand of the GPUs in China is 1.8 million units which not only places significant pressure on NVIDIA but also allows it to charge higher prices to increase its capacity.
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