Better Offline - "The Black Market for AI GPUs with Steve Burke"
Podcast: Better Offline (Cool Zone Media & iHeartPodcasts)
Release Date: September 3, 2025
Host: Ed Zitron
Guest: Steve Burke (Gamers Nexus)
Episode Overview
This episode dives into the shadowy world of the AI GPU black market, specifically detailing how high-powered Nvidia GPUs find their way into China despite U.S. export controls. Host Ed Zitron interviews Steve Burke from Gamers Nexus, who recently produced — and then had removed — a comprehensive video investigation on the topic. Together, they explore the convoluted mechanics of GPU smuggling, implications of international tech competition, government regulatory blind spots, and the inconsistent responses from both industry heavyweights and authorities.
Key Discussion Points & Insights
1. The DMCA Takedown Saga
[02:25 – 06:12]
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Steve Burke’s investigative video on black market GPUs in China was taken down by YouTube after a DMCA complaint from Bloomberg, specifically over a clip of Donald Trump speaking about export controls.
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Steve outlines the DMCA process: YouTube sided with Bloomberg, pulling the video and freezing ad revenue. The dispute is now in a limbo — Bloomberg has 10 business days to file a lawsuit or the video is reinstated.
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Quote:
"The biggest damage that's done is from the loss of momentum in those...13 days or so." (Steve Burke, 05:57)
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Ed and Steve speculate the true motives, hinting at corporate rivalry since Bloomberg’s own reporting had failed to uncover what Gamers Nexus did “on the ground.”
2. How GPUs Are Actually Smuggled
[09:36 – 18:27]
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Steve describes their journalistic process, leveraging local contacts in Hong Kong and mainland China to directly connect with hardware users, suppliers, and middlemen.
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The so-called “black market” for GPUs is often regarded by its participants as just the “market.”
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Both consumer-tier and data center GPUs (notably, Nvidia’s H100, A100, RTX 4090/5090) are targets for smuggling, due to their value in AI work.
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Modding consumer GPUs (increasing memory from 24GB to 48GB, for example) makes otherwise outdated hardware able to perform high-end training.
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Smuggling methods include purchasing GPUs in the U.S., stripping them down, and privately shipping (or even hand-carrying) them via Hong Kong, Macau, or third countries, with a simple cross-border markup.
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Quote:
"He buys the 4090s, ships the boards back, his profits about $300 US per board before taxes...Once they arrive, they get redistributed from there." (Steve Burke, 17:09)
3. Why Black Markets Thwart Export Controls
[18:27 – 23:00]
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Ed and Steve note export controls have only fueled demand and creativity among Chinese buyers and Western suppliers.
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The “arbitrariness” of U.S. controls is highlighted: initial formulas for restrictions ignored key specs like memory capacity, and companies like Nvidia rapidly design new products to technically comply while preserving utility for AI application.
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Quote:
"The government sets some regulations and a company says, 'Okay, we'll comply with these,' and then they comply...And then the government kind of says, 'No, wait, not like that.'" (Steve Burke, 20:47)
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Both agree government regulators lack deep understanding of GPU specs, and that “benchmark-based” regulations might be more effective than spec-sheet approaches.
4. Nvidia’s “Turn a Blind Eye” Approach
[23:00 – 25:09]
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Steve reports a recurring local idiom in context — “open one eye, close one eye” — describing Nvidia’s supposed awareness of black market flows.
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Most in the chain agree Nvidia is likely aware, but choose not to intervene as long as it doesn’t upset the U.S. government.
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Quote:
"How could they not?...These things are very expensive. You've got 30 plus thousand dollar GPUs. And it just seems like they would all be tracked." (Chinese University of Hong Kong professor, paraphrased by Steve, 23:00)
5. On-the-Ground Ingenuity & Grey Market Engineering
[25:09 – 28:23]
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American “suppliers” operate out of their cars, modifying and testing boards on makeshift benches, sometimes carrying spare license plates for anonymity; Asian repair shops swap memory modules or rebuild dead boards.
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Once inside China, there are no legal risks for traders or buyers; only illegal importation is policed.
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Quote:
"The shops...are just repair shops and they just happen to be really good at board level BGA...They keep silicon in service." (Steve Burke, 27:05)
6. Smuggling Tales: Lobster Crates & Baby Bumps
[29:23 – 34:38]
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Memorable anecdote: GPUs were discovered hidden in shipments of live lobsters or prosthetic baby bumps in Hong Kong and Macau customs.
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Nvidia (and public) had dismissed these as urban legends, but Steve provides documentary evidence.
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Quote:
"Turns out that is not a tall tale. That is a thing that happened." (Steve Burke, 34:23)
7. Geopolitics & Shifting Tech Alliances
[34:38 – 39:11]
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The H20 ban on Nvidia GPUs in China was temporarily lifted, but Chinese state organs have warned local buyers off Nvidia hardware, citing security concerns (spyware/backdoors).
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Steve’s reporting finds there's still little actual take-up of Huawei or AMD hardware even in the face of export controls, primarily because Nvidia’s CUDA software is a “moat” that keeps most global AI workloads locked to their chips.
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Quote:
"Until there's a big push to move away from [CUDA], it's Nvidia GPUs all the way down...Maybe the push is export control." (Steve Burke, 37:53)
8. Looking Ahead: The Blackwell Generation and Loopholes
[41:28 – 42:47]
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New GPU generations, like Blackwell, are already leaking, using third-party companies in Taiwan or Singapore to test, then reroute shipments to China.
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Steve witnessed rooms filled with high-end Blackwell servers (“GB200 Grace Blackwell”), showing just how established the parallel market channels are.
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Quote:
"There is some intermediary...a Taiwanese testing agency...Once it all works, forward that shipment to their customer in China." (Steve Burke, 41:34)
Notable Quotes & Memorable Moments
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On Bloomberg DMCA – Motivation & Irony
"They drive around in a desert, they point the camera at some buildings that are being constructed. They say, you know, there's AI GPUs in them there hills. And then that's about it."
— Steve Burke, [07:30] -
On the Black Market’s Resourcefulness
"All these guys were just like, yeah, I've got a thing in the back of my car full of wires. Yeah, I have a whole rig."
— Ed Zitron, [25:09] -
On Regulatory Whack-a-mole
"The companies that make these things, obviously full appropriate credit to Nvidia, the company is extremely confident with making GPUs. They know what they're doing and they're going to know a lot more about how to tweak those dials to comply than a government agency will."
— Steve Burke, [22:20] -
On CUDA’s Dominance
"From an end user standpoint, there are benefits to this. Where CUDA for me for rendering a video, it just works better than something else. Right, right. And so...it's a chicken or the egg problem..."
— Steve Burke, [40:23] -
On Smuggling Creativity
"There were CPUs and GPUs smuggled in with crates of live lobsters or prosthetic baby bumps."
— Steve Burke, [29:23] -
On Chinese Market Pragmatism
"Once it's there [in China], yeah, there's no real control over it."
— Steve Burke, [28:33]
Timeline of Key Segments
- [02:25] DMCA Takedown Story
- [04:20] Speculation on Bloomberg’s Motive
- [08:08] Reporting Approach vs. Legacy Media
- [09:36] Building On-the-Ground Contacts in China/Hong Kong
- [11:09] Details of Restricted GPUs (consumer & server grade)
- [16:32] Firsthand Price Sheets, Smuggling Mechanics
- [18:27] Effects and Irony of Export Controls
- [20:20] Nvidia’s Adaptation to Regulation and Loopholes
- [23:00] Nvidia’s “Turn a Blind Eye” Philosophy
- [25:09] Profiles of U.S. and Asian Smugglers/Repairers
- [29:23] Lobster Smuggling Anecdote
- [34:38] Chinese Government's Security Allegations against Nvidia
- [37:53] CUDA as a Moat/Chokepoint
- [41:28] The Blackwell Generation and Middleman Routing
Conclusion
The episode’s energetic and skeptical tone balances Steve Burke’s detailed, technical storytelling with Ed Zitron’s sharp critique of regulatory and corporate failures. Together, they reveal a black market for AI GPUs that is not only thriving, but often more innovative, networked, and pragmatic than official trade channels. Critical takeaways include the sheer impossibility of airtight export controls in the face of motivated buyers, profit-seeking intermediaries, and global supply chains, and the ever-growing influence of proprietary software ecosystems like CUDA in maintaining hardware monopolies.
Final shoutout:
"If that lawsuit lands from Bloomberg, everyone will hear about it." — Ed Zitron, [43:21]
For more on GPU smuggling, the machinations of international tech markets, and wry media industry critique, check out the Gamers Nexus YouTube channel and, of course, future episodes of Better Offline.