Sources say Nvidia’s B300 server is priced at $1 million in China due to U.S. restrictions.

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.

Prices of Nvidia’s most advanced and powerful server, critical for artificial intelligence tasks, have climbed since early this year, but rose sharply after the grey market, a key supply channel, came under pressure, the four sources said.

The price surge is also being driven by robust computing demand from Chinese technology companies, even ​as many avoid holding Nvidia hardware directly on their books for fear of exposure to U.S. sanctions, the sources said.

They spoke ​on condition of anonymity as the matter is a sensitive one. Reuters is the first to report the ⁠million-dollar price tag.

Responding to questions from Reuters, Nvidia said the B300 was restricted from sale in China, and its partners needed to ​be committed to strict compliance.

“As systems become increasingly large and complex, unlawful diversion is a recipe for failure,” it warned in a statement.

“Nvidia does ​not provide any service or support for such systems, and the enforcement mechanisms are rigorous and effective.”

A B300 server, which houses eight B300 GPUs, is priced at about $550,000 in the United States, up from around $500,000 late last year, two of the sources said.

The near-doubling of ​prices in China, from about 4 million yuan late last year, reflects a scarcity premium driven by tighter U.S. curbs on exports.

It comes ​as Chinese tech giants scramble for the most cost-efficient hardware for generating tokens, the basic units of text processed by an AI model, to monetise their ‌models and ⁠computing infrastructure.

The scarcity followed U.S. authorities’ March prosecution of Yih-Shyan “Wally” Liaw, a co-founder of Nvidia partner Supermicro, the sources added.

Some companies finding the price rise has put purchases out of reach are instead exploring options for rentals, which have risen as high as 190,000 yuan a month on a one-year short-term contract.

Huawei and other Chinese AI chipmakers are seizing the opportunity from this dispute to chip away at Nvidia’s dominant 55% market share in China, where rival AMD holds just 4%.

($1=6.8302 Chinese yuan renminbi)