The Black Market for AI GPUs with Steve Burke

Summary

---

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]

• 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.

• 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.

• Quote:

  "The biggest damage that's done is from the loss of momentum in those...13 days or so." (Steve Burke, 05:57)

• 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]

• Steve describes their journalistic process, leveraging local contacts in Hong Kong and mainland China to directly connect with hardware users, suppliers, and middlemen.

• The so-called “black market” for GPUs is often regarded by its participants as just the “market.”

• 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.

• Modding consumer GPUs (increasing memory from 24GB to 48GB, for example) makes otherwise outdated hardware able to perform high-end training.

• 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.

• 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]

• Ed and Steve note export controls have only fueled demand and creativity among Chinese buyers and Western suppliers.

• 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.

• 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)

• 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]

• Steve reports a recurring local idiom in context — “open one eye, close one eye” — describing Nvidia’s supposed awareness of black market flows.

• 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.

• 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]

• 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.

• Once inside China, there are no legal risks for traders or buyers; only illegal importation is policed.

• 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]

• Memorable anecdote: GPUs were discovered hidden in shipments of live lobsters or prosthetic baby bumps in Hong Kong and Macau customs.

• Nvidia (and public) had dismissed these as urban legends, but Steve provides documentary evidence.

• 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]

• 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).

• 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.

• 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]

• New GPU generations, like Blackwell, are already leaking, using third-party companies in Taiwan or Singapore to test, then reroute shipments to China.

• Steve witnessed rooms filled with high-end Blackwell servers (“GB200 Grace Blackwell”), showing just how established the parallel market channels are.

• 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

• 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.

---

Transcript

[Simone Boyce]

This is an iHeart podcast.

[iHeart Podcast Announcer]

Run a business and not thinking about podcasting. Think again. More Americans listen to podcasts than ad supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. Learn how podcasting can help your business. Call 844-844-IHeart.

[Dr. Scott Barry Kaufman]

I'm Dr. Scott Barry Kaufman, host of the Psychology Podcast. Here's a clip from an upcoming conversation about how to be a better you. When you think about emotion regulation, you're not gonna choose an adaptive strategy which is more effortful to use unless you think there's a good outcome. Avoidance is easier. Ignoring is easier. Denials easier. Complex problem solving takes effort. Listen to the Psychology podcast on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[The Puzzler Host]

Let's start with a quick puzzle. The answer is Ken Jennings appearance on the puzzler with A.J. jacobs. The question is, what is the most entertaining listening experience in podcast land? Jeopardy truthers believe in?

[Ed Zitron]

I guess they would be conspiracy theorists.

[The Puzzler Host]

That's right.

[Steve Burke]

They gave you the answers and you still blew it.

[The Puzzler Host]

The Puzzler. Listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Aaron or Sarah Foster]

We're siblings like you fight, you disagree. It's really hard to be in a partnership. Yeah, you judge each other, lead differently, and we've gotten to that edge.

[Simone Boyce]

Hey, I'm Simone Boyce, host of the Bright side. And this week I'm joined by Hollywood power sisters Aaron and Sarah Foster. They're getting real about boundaries, rejection, plus what's next for their hit Netflix series. Nobody wants this. Listen to the Bright side on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Ed Zitron]

Hello and welcome to Better Offline. I'm your host, Ed Zitron. Better Offline. And of course you can go into the the notes for the episode. You can take a look at links from a newsletter. You can go and buy some merch, as always. But much more importantly, today I'm joined by the esteemed Steve Burke of Gamers Nexus. Steve, thank you for joining us.

[Steve Burke]

Thanks for having me.

[Ed Zitron]

So you did an incredible video on the black market smuggling of Nvidia's AI GPUs into China. And then there has been a thing that's happened where the video has been pulled down due to a DMCA complaint from Bloomberg. What is happening?

[Steve Burke]

Yeah, it's so the video. It's really cool video where we went all over China finding these GPUs as part of that, we included a recap of all the news of export controls, where the US controls GPUs that are above a certain performance threshold and the allowance to export those to China by American companies. And so that was the story we wanted to look into. Okay, but they're still getting to China. And so how is that? And as part of that recap, go through all the news. We've got clips of various politicians. There was a clip of Obama in there, and there was a clip of Trump in there, a couple of them talking about AI or GPU export control bans. Of course, AI. I know ED is one of your favorite topics. My faves. Yes, yes, me as well. And yeah, so we received a copyright strike from small publication called Bloomberg. Oh, what's up? Yeah, so that strike took the video offline, and now we are currently challenging it. And so the strike was for specifically, I believe it was minutes 22 until minute 23:15 in the video of Donald.

[Ed Zitron]

Trump speaking the President of America, Correct?

[Steve Burke]

Yes.

[Ed Zitron]

That is ludicrous. And you went to New York specifically to have it out with them, did they? Where do we stand as we speak? Because this is going out in about a week from now. It's August 28th, so who knows what 26 even don't know what happened next.

[Steve Burke]

Yeah, if it goes out in about a week, then that'll be pretty close to when we should have an update from YouTube.

[Ed Zitron]

Because the video is off right now.

[Steve Burke]

Correct? The video's gone. And it's very interesting how copyright strikes work, because if basically the way it works is a company files a strike, they decide if there's infringement of some kind and they file it, YouTube then basically especially recommend Bloomberg Size will automatically approve it. It's then up to the creator to dispute that the video is offline. During this entire process, any money from the video is held at least in escrow. And so then you can dispute it if you want. At that stage, YouTube then decides if it's going to accept your dispute. It accepted ours, written by a lawyer. So that makes sense. And then they step back and they're like, okay, we're not involved anymore. It's between you guys. And so the party that filed the claimant, so Bloomberg here has 10 business days to file proof of lawsuit. So if they submit to YouTube proof that they are suing us, which thus far as we record this, they have not, then at that stage YouTube would keep the video offline and they kind of let the two parties resolve it amongst themselves. If they don't Submit any proof of a lawsuit or they don't file a lawsuit and then show YouTube that they've done so again, they haven't at this point. Then basically in 10 business days, the video goes back up, we get fucked over for the 10 days in between and, and then the money in theory should be released back to us. The ad revenue that was made from it, if it follows that course. But the biggest damage that's done is from the loss of momentum in those, you know, total time period, maybe 13 days or so.

[Ed Zitron]

But why would Bloomberg do this? Are they really that attached to videos of Donald Trump or is it something else?

[Steve Burke]

I mean, yeah, we talked about this in our video where we flew out to try and speak with them. I have a number of theories. We don't know their motive precisely, but there's a few strange things going on where first of all, I've noticed that they have not claimed any or struck any that I'm aware of of the re uploads of the video. So that's interesting because there's hundreds of them. It was just hours that went up initially. Secondly, we have used that clip before and that hasn't been stricken. And so specifically in this black market video. And yeah, the theories we came up with were there's some competing content from Bloomberg where they attempted to do what we did. It was really a failed attempt. They tried to find smuggled AI GPUs in China. As far as they kind of presented it in data centers, they were unable to do so. They couldn't get any access. They film sand in the desert, they go home. There's also.

[Ed Zitron]

That's all they got.

[Steve Burke]

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.

[Ed Zitron]

It's kind of funny that you appear to on your own and with your team obviously able to get this access that these large legacy media people don't. Which it's meant to be the other way around based on what everyone says. So what is it the makes your approach different to Bloomberg's? Like, why did you get stuff that they didn't rather than just the desert, Right?

[Steve Burke]

Yeah. Well, to be fair, we did not film a desert, so they did have an exclusive there. But I think it comes down to the approach where we looked at it like, this is an interesting concept, this idea of black market GPUs, but from my point of view, we approached it as well, let's Just see what do the people involved in this chain think? And do they think it's a black market or do they just think it's a market? A lot of the people we worked with were just, I think, amused at the concept of being involved in the media process and wanted to see how it works. And so honestly, I think a lot of that access, especially to the people who are just sort of like normal people, they're not these big executives at some huge corporation, they're middlemen and they're people transacting GPUs on the ground. I think for them, if you go into it without this presupposition of some kind of particular, I don't know, leaning or ethics of whether what they're doing is or isn't okay or whatever, or.

[Ed Zitron]

Even expecting what you'll find in advance.

[Steve Burke]

Exactly. Yeah. I think if you go in with an open mind of like, we're just going to hang out with this guy for a day and just observe his job, people are, you know, they're pretty happy to share that. So. Yeah.

[Ed Zitron]

How did you actually start though? So you, you came up with the idea that you wanted to see how illicit GPUs are making it into China. Did you have contacts in China or Hong Kong and so on that you talked to in advance? And they kind of said, I, oh, if you come here, we can show you this. What was the process?

[Steve Burke]

Yeah, the process was really cool. We're still kind of learning how to iterate on this, but each time we're the big thing we learned this time for this investigation was really just trying to that first contact matters a lot and being able to work with that first person we find to then find their contacts and kind of follow the chain down the line. And so the first guy we found is a professor at the Chinese University of Hong Kong. He buys and uses these high end GPUs in servers for educational purposes and research purposes. And as soon as we made contact with him, we were able to work with someone who first of all speaks native level, excellent English, so that certainly helped. And then secondly, who has a lot of local knowledge and contacts. And I think a lot of it is just kind of knowing which in our case, which link in the chain you need next to make the story make sense. So in his case, he's a user of these GPUs. So next we need is some kind of supplier, you know, and then we need their supplier.

[Ed Zitron]

Yeah, so what? It's all quite complex. I did watch the video and it was, it Was what, three hours or so or more even? It was really wonderful. And so what exactly are the GPUs that are restricted? Was it just AI GPUs, was it like consumer level ones as well? What is exactly being handed around?

[Steve Burke]

It's both. So on the high end side, there's some smuggling and presence of these Data center class GPUs. So that'd be things like H1 hundreds, Hopper 1 hundreds, A100. We actually physically saw several of those and things like that. On the consumer side, there aren't as many restricted consumer GPUs, but there are a few. So the RTX 5090 is one of them that has 32 gigabytes of video memory. So that's very valuable for these use cases. The RTX 4090 actually is another one. And that one's kind of amusing because it's.

[Ed Zitron]

And that's a consumer gpu, right?

[Steve Burke]

Yes, consumer gpu. Yeah. And last gen consumer GPU at that. But it's easily modified to carry double the video memory as the actual official Nvidia Spec and the SKU. So they can increase it from 24 to 48 gigabytes of memory, which is extremely valuable for these training and LLM type tasks where it may be a last gen, so it's technically a little bit slower, but if you can fit it in memory, you can still run it, versus if you can't fit it in memory of the model, you may not be able to run it at all. And so those are the consumer cards. The 4090 though is interesting because one of the guys we spoke to, who is effectively a buyer and seller of these banned GPUs, he was asking me on camera, he was seeking confirmation of, well, but are you sure the 5090s banned. And I said, yeah, I'm sure. Here it is on the list. And he was so confused because he said, but they're just all over the market next door. We walk over there and there's dozens of them. So.

[iHeart Podcast Announcer]

Run a business and not thinking about podcasting, think again. More Americans listen to podcasts than ad supported streaming music from Spotify and Pandora. And as the number one podcaster, iHeart's twice as large as the next two combined. So whatever your customers listen to, they'll hear your message. Plus, only Iheart can extend your message to audiences across broadcast radio. Think podcasting can help your business. Think iHeart streaming radio and podcasting. Call 844-844iheart to get started. That's 844-844iheart if a baby is giggling.

[NHTSA and Ad Council Announcer]

In the backseat, they're probably happy. If a baby is crying in the backseat, they're probably hungry. But if a baby is sleeping in the backseat, will you remember they're even there? When you're distracted, stressed or not usually the one who drives them, the chances of forgetting them in the backseat are much higher. It can happen to anyone. Parked cars get hot fast and can be deadly. So get in the habit of checking the back seat when you leave a message from Nitza and the Ad Council.

[Emily Tish Sussman]

Have you ever wished for a change but weren't sure how to make it? Maybe you felt stuck in a job, a place, or even a relationship. I'm Emily Tish Sussman, and on she Pivots I dive into the inspiring pivots of women who have taken big leaps in their lives and careers.

[Simone Boyce]

I'm Gretchen Whitmer.

[Emily Tish Sussman]

Jody Sweetin.

[Steve Burke]

Annika Patton.

[Elaine Welteroth]

Elaine Welteroth.

[Emily Tish Sussman]

I'm Jessica Voss.

[Aaron or Sarah Foster]

And that's when I was like, I gotta go. I don't know how, but that kicked off the pivot of how to make the transition.

[Elaine Welteroth]

Learn how to get comfortable pivoting because your life is going to be full of them.

[Emily Tish Sussman]

Every episode gets real about the why behind these changes and gives you the inspiration and maybe the push to make your next pivot. Listen to these women and more on she Pivots now on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Elaine Welteroth]

I just think the process and the journey is so delicious. That's where all the good stuff is. You just can't live and die by the end result.

[Aaron or Sarah Foster]

It's scary putting yourself out there, especially when it's something you really care about and something that you hope is your passion in life and you want people to like it.

[Simone Boyce]

Let's get delicious and put ourselves out there. I'm Simone Boyce, host of the Bright side, and those were my recent guests, comedian Phoebe Robinson and writer Aaron Foster. And on this show, I'm talking to the brightest minds in entertainment, health, wellness, and pop culture. And every week we're going places in our communities, our careers, and ourselves. It's not about being perfect. It's about going on a journey and discovering the bright side of becoming. Few people know that better than soccer legend Ashlyn Harris.

[Aaron or Sarah Foster]

It's the journey, it's the people, it's the failures, it's the heartache, it's the little moments.

[Simone Boyce]

These are our moments to laugh, learn, and exhale. So join me every Monday and let's Find the bright side together. Listen to the bright side on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Ed Zitron]

It's so strange as well, because it doesn't seem like it. You basically walked off the plane and had a price sheet from just a guy. Like it wasn't clear how you got the price sheet exactly. And perhaps you can't say, but it was just. Yeah, these things are banned. Other than the fact we have just like guys who sell them literally everywhere.

[Steve Burke]

Yeah.

[Ed Zitron]

And how are they getting in?

[Steve Burke]

So there's a couple ways. One of the ones that we showed in the video is really interesting. So the very end of the process, we actually. This is one of the reasons we delayed initial publication. We were able to, with help of a viewer, locate someone you could actually classify as a smuggler in the U.S. so someone from China in the U.S. and he buys GPUs from people in the U.S. he drives around all over and buys mostly 4090s, which are in high demand in China. And then he'll strip those down. So that could be removing the cooler. I don't think this particular guy desolders them. I've heard stories of some people desoldering GPUs and mailing them that would, that would reduce your shipping cost a lot, increase your margin. But he buys the 4090s, ships the boards back his profits about $300 US per board before taxes. Wasn't 100% clear if he does or doesn't pay taxes. And then at that point, once they are either shipped into Hong Kong or Macau directly, if they feel gutsy enough, or indirectly through a third country, a middle country where there is no export control, you know, then they arrive and they get redistributed from there. They're sometimes hand carried as well, like by students, international students who just fly back with a 59 they bought at Best Buy or something. And they can double their money roughly, if they're lucky.

[Ed Zitron]

That's so. It's wacky that there is such a big black market, but I guess the export bands just created it, as did this whole AI. This crazed AI moment. Did in fact, while you were over, over in Hong Kong, did you actually go to China? I can't remember. Or whether it was just in Hong. So did you. This is an anecdotal thing. How was the pressure of AI there? How big was the conversation? The advertisement, did you see it on the same level? It's fine if you didn't. I'm just curious.

[Steve Burke]

I saw it more in Taiwan, which we went to as well. So, yeah, after the China trip, we went over to Taiwan and I don't think it made it into the cut, but we shot a short clip of just a bus, like a public bus with a gigantic AI laptop advertisement on it. So I would say it's kind of, at least there, it's similar to what you see here, where it's, you know, if you're anywhere in the vicinity of a. Of a Best Buy or a city that has technology dealers, then you're going to see AI ads in China. Yeah. You saw it in the tech markets for sure. Some banners, but it just, it. I don't know. That's. I, I only understand Chinese if I'm actively trying to understand it, you know, so it's. I think a lot of that gets filtered out for me.

[Ed Zitron]

Right. I was good. Yeah. I assume you speak some. You seem to speak some Chinese. I can't speak anything but English, so I could not correct your Chinese at all.

[Steve Burke]

You do speak more proper English than I do, though, so.

[Ed Zitron]

Yeah, yeah, I speak all kinds of it these days. It's not going well. People criticize my accent all the time. So. As far as how the government sets these limits, one thing he did really eloquently towards the beginning of the video as well was he kind of went through how arbitrary the limits seem to be and how Nvidia seems very capable of adapting around them to the point that it almost doesn't make sense.

[Steve Burke]

Yeah, yeah, they. They've modified the regulations a few times and it's, It's. So this particular part, I don't really blame Nvidia 4 for this, which is just trying to. The government sets some regulations and a company says, okay, we'll comply with these, and then they comply with them. And then the government kind of says, no, wait, not like that.

[Ed Zitron]

Yeah, that's very standard for pretty much all regulation. It's good or bad, what have you, but it's not. It happens all the time with companies.

[Steve Burke]

Yes. And in this case, one of the things that, as the, I guess, AI world developed and the applications, one of the things that changed was this understanding that memory capacity is basically the most important aspect of it. In the initial versions of the formula, didn't consider memory in any scenario. From what I remember, it was based on the marketed flops of performance on the spec sheet multiplied against the bit length of the operation or something like that. They later added memory bandwidth. Memory capacity, though, is still, as far as I'm aware right now. Is still not considered in the formula.

[Ed Zitron]

Yeah, it feels just arbitrary, but I imagine also it's quite difficult to find a way to do this, especially when the people setting the regulation might not have the best handle on computers.

[Steve Burke]

Yeah, I think the best way to do this would probably be if they wanted to, and I don't have a particular one way or the other, but if they wanted to control it, I think the best way is probably some kind of benchmark or set of benchmarks, just like you would do for a review where you say, okay, if it exceeds some performance threshold in this real world, use case or multiple of them in aggregate, then it's export controlled. But instead they just kind of calculate based on the spec sheet. And 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.

[Ed Zitron]

So on the subject of Nvidia knowing things, do you think that, do they seem aware of any of this, any of this smuggling happening? Did you get any comment out of them?

[Steve Burke]

We asked a lot of the people in the chain what their perception was of Nvidia's awareness. And so the professor at the Chinese University of Hong Kong, he had a great answer when I asked him, do you think Nvidia knows? And he kind of, he paused for a second and then he said, well, how could they not? You know, like these things are very expensive. You've got 30 plus thousand dollar GPUs. And it just seems like they would all be tracked.

[Ed Zitron]

So what was the term? There was a specific term as well for like, kind of like basically equivalent of ignoring.

[Steve Burke]

M. Yeah. So the Chinese is B E G N which means open one eye, close one eye or turn a blind eye is the idio. And that's awesome.

[Ed Zitron]

It's just very cool.

[Steve Burke]

Yeah, it's super. I mean the coolest part about that was multiple people said that exact idiom. And I don't know, it's such a specific choice of words. It'd be the same as if you asked like three people a question and they all said, oh, they turn a blind eye at some point. You're like, okay, this seems to be a real consistent belief here. But yeah, I think from Nvidia's standpoint, it's whether or not they want to actually control what gets in. It's hard to say. Certainly from a pure financial standpoint, the more GPUs they sell, the more money they make. They probably don't really care who they sell them to as long as they sell them to someone and then where they end up after that. Maybe to the extent that Nvidia doesn't want to piss off the United States government, they, they try to comply as much as they reasonably can. But how much do they actually try to control ingress into a country that's export controlled? It's hard to say, but certainly I think they are aware of this happening. I have a really hard time believing that they are unaware their GPUs are making it into China when they shouldn't be.

[Ed Zitron]

And I imagine it must be quite hard to stop. I hate to have any sympathy for Nvidia, but it does, it does feel like something that would be kind of a moving target because one thing that was consistent across the whole video was the ingenuity of the people involved. It does make you see like American entrepreneurs sometimes and they're like, oh yeah, it's tough to, you know, the hours are very tough. And you know, I was coding all night and all of 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.

[Steve Burke]

Yeah, it's crazy. And that is, I mean, again, you know, from that particular side of things, I don't suspect. I mean, look, it's a government regulation and if the government wants to regulate it, it's kind of up to them. Obviously the companies need to comply with it, but I wouldn't expect a company to even Nvidia to send in any kind of enforcement. Maybe what they would do is if they wanted to enforce it, they might identify, okay, this purchaser. There's evidence of this purchaser exporting to China anyway. And so we're just going to stop selling to them or something. But that's kind of, I think, the most you might expect of them. But yeah, as far as the ingenuity, it was pretty crazy. Like the guy in the US who buys the cards, he's just got a Prius with a massive battery bank in the back, like a UPS with a lithium ion battery in it. He's got a test bench hooked up to it, an ATX test bench. Pops the trunk open, he's got a spare license plate in the trunk for some reason, I don't know why.

[Ed Zitron]

Best not to ask.

[Steve Burke]

Best not to ask. Yeah, don't need to know if you want to sell him your card. You're just some American who found him on Facebook Marketplace. He, at the time we, we were talking with him, he was paying $2,000 flat. He makes 300 when he sells it. And you bring him the card, meet him wherever he tests it, and in the back of the, you know, in the trunk of the car, he just runs a benchmark, make sure it's good, and then buys it and ships it back or carries it back, depending on how secure he feels. And then also to your point of ingenuity, the shops that are capable of modifying cards where they're just, they're repair shops and they just happen to be really good at board level BGA or ball grid array device repair or swapping. And so they can pull memory modules, they can add memory modules, swap the GPU between PCBs and they're able to keep silicon in service where they're just repair shops. It's kind of like from their perspective, look, they're not doing anything illegal in China, they're just keeping boards in service. But for people who need these high capacity GPUs for AI tasks and they happen to be export controlled, a shop like this would be capable of taking a card that has died through use or just needs to be upfit to be better. And they can do that for pretty cheap and basically in a couple hours.

[Ed Zitron]

And it's not illegal to sell them in China once they are there.

[Steve Burke]

Right?

[Ed Zitron]

They've like that is not a crime. Like China is not prosecuting people for any of this.

[Steve Burke]

Correct. It is not illegal to own or sell these GPUs or buy them in China. It's illegal if you are an American company, if you're Nvidia or you're Best Buy or a partner or whatever. It would be illegal to sell the export controlled cards to a company or an entity or person in China. But once it's there, yeah, there's no real control over it. The only place that we found that China steps in is if there's some kind of undeclared ingress through port. So like for example, there were CPUs and GPUs at various points in the last several years that were smuggled in with crates of live lobsters or prosthetic baby bumps.

[Ed Zitron]

But was that real? Was the lobster thing real?

[Steve Burke]

The lobster thing was real. Despite what Nvidia said.

[iHeart Podcast Announcer]

Run a business and not thinking about podcasting. Think again. More Americans listen to podcasts than ad supported streaming music from Spotify and Pandora. And as the number one podcaster, Ihearts twice as large as the next two combined. So whatever your customers listen to, they'll Hear your message. Plus, only iHeart can extend your message to audiences across broadcast radio. Think podcasting can help your business? Think iHeart streaming radio and podcasting. Let us show [e-mail] that's iheartadvertising.com I.

[Elaine Welteroth]

Just think the process and the journey is so delicious. That's where all the good stuff is. You just can't live and die by the end result.

[Aaron or Sarah Foster]

It's scary putting yourself out there, especially when it's something you really care about and something that you hope is your passion in life and you want people to like it.

[Simone Boyce]

Let's get delicious and put ourselves out there. I'm Simone Boyce, host of the Bright side, and those were my recent guests, comedian Phoebe Robinson and writer Aaron Foster. On this show, I'm talking to the brightest minds in entertainment, health, wellness, and pop culture. And every week we're going places in our communities, our careers and ourselves. It's not about being perfect. It's about going on a journey and discovering the bright side of becoming. Few people know that better than soccer legend Ashlyn Harris.

[Aaron or Sarah Foster]

It's the journey, it's the people, it's the failures, it's the heartache, it's the little moments.

[Simone Boyce]

These are our moments to laugh, learn, and exhale. So join me every Monday, and let's find the bright side together. Listen to the bright side on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[NHTSA and Ad Council Announcer]

If a baby is giggling in the backseat, they're probably happy. If a baby is crying in the backseat, they're probably hungry. But if a baby is sleeping in the backseat, will you remember? They're even there when you're distracted, stressed or not, usually the one who drives them. The chances of forgetting them in the back seat are much higher. It can happen to anyone. Parked cars get hot fast and can be deadly. So get in the habit of checking the back seat when you leave a message from NHTSA and the Ad Council.

[Emily Tish Sussman]

Have you ever wished for a change but weren't sure how to make it? Maybe you felt stuck in a job, a place, or even a relationship. I'm Emily Tish Sussman, and on she Pivots. I dive into the inspiring pivots of women who have taken big leaps in their lives and careers.

[Simone Boyce]

I'm Gretchen Whitmer.

[Emily Tish Sussman]

Jodie Sweetin.

[Steve Burke]

Monica Patten.

[Elaine Welteroth]

Elaine Welteroth.

[Emily Tish Sussman]

I'm Jessica Voss.

[Aaron or Sarah Foster]

And that's when I was like, I gotta go. I don't know how, but that kicked off the pivot of. Of how to make the transition.

[Elaine Welteroth]

Learn how to get comfortable pivoting because your life is gonna be full of them.

[Emily Tish Sussman]

Every episode gets real about the why behind these changes and gives you the inspiration and maybe the push to make your next pivot. Listen to these women and more on she pivots now on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Ed Zitron]

Hell yeah. I. I love the so what actually describe the full lobster situation. I think everyone wants will want to.

[Steve Burke]

Hear about the lobster. Yes. So the lobster situation, as it were, is basically, there was a Hong Kong port, so customs intercepted a white van. I think it was. There's like a customs post. They post photos of the things that they are able to snipe being brought in improperly. So Hong Kong's a free trade port, but there's still certain declarations you have to make, and sometimes people won't make those. And so there was a van bringing in crates of undeclared live lobsters driving on a think it was the Macau or the Zhuhai Bridge or something. But anyway, they got intercepted and alongside the live lobsters were GPUs and they were older. I think they were quadros, but they were all being brought in improperly. And yeah, so customs post the thing, they're like, we found this. And I think that's just kind of like the here's us doing our job and maybe scared people off or whatever. And then later, AI startup Anthropic released a statement talking about how there needed to be more strictly enforced export control in the US and they mentioned smuggling of GPUs with lobsters. Nvidia responded. I don't have their statement in front of me right now, but it was something along the lines of it would be better if American AI companies would focus on innovation rather than. The part I do remember was tell tall tales of prosthetic baby bump smuggling or GPUs. Sensitive electronics being smuggled with live lobsters. Turns out that is not a tall tale. That is a thing that happened.

[Ed Zitron]

This is the thing. People say, Jensen Huang is cool. If you're cool, you. You say, yeah, our chips. Like, we don't like this happening. This is bad. We're doing everything we can to stop it. But yeah, they're doing James Bond shit to get our GPUs. Like, come on. You could just say that. Like, they do seem a little sensitive. And we're, we're recording this the day before their earnings And I got no idea what's going to happen. No one does. Everyone's a bit, everyone's a bit worried about it. So it's, I think it, it, the China market is going to get extremely interesting because They've got the H20 ban, but now the H20 ban has been lifted and now we're in this weird spot where, I don't know if you've heard anything about this yourself, where there are suggestions that the Chinese government is actively saying not to buy Nvidia GPUs. Have you heard anything about that?

[Steve Burke]

Yes. So the Chinese government, I believe it's called the cyberspace. It might be a security agency or something like that, but one of their government agencies put out a statement following a separate statement from a state owned, or at least state controlled, in some capacity media report, where the statement said, or at least floated the possibility that Nvidia's H20s may have some form of spyware in them. And so the suggestions were tracking or government backdoors. And so that was kind of the accusation. Nvidia of course posted a statement saying, absolutely not. This is not a thing. And you know, just to be fair here, there's not currently, as far as we're aware of any firm evidence of this. But I'm also sure that governments know things about, you know, about products from other nations that we would never know anyway, so who knows? But, but that's where it stood. Nvidia said we don't have these. China's agency said to companies in China that they should be wary of using H20s and advised against purchasing them for fear of some kind of backdoor or spyware.

[Ed Zitron]

So how realistic would it be for. Actually, did you hear any scuttlebutt around this of switching to like Huawei chips or something?

[Steve Burke]

We did ask. Yeah, I think we might have only kept one of those questions in the actual video. But I did ask a lot of people Huawei from the user's perspectives, the people we spoke to, none of the people we spoke to are using Huawei components right now. So they're getting more powerful, from what I understand. I think there's a few hurdles. One of them is it's kind of the same reason where the companies aren't even really using AMD and they've been doing this for a while, whereas Huawei is pretty new. And a lot of that comes down to Cuda, where Nvidia is the proprietor of Cuda, which is a library they can use to accelerate tasks in which a lot of software is written to use, I mean, even just rendering a.

[Ed Zitron]

Video, it's like the coding language to get accelerated computing, right?

[Steve Burke]

Correct.

[Ed Zitron]

Yeah, specifically on Nvidia GPUs though.

[Steve Burke]

Yes, it specifically works on Nvidia and nothing else. And so AMD would have to use, I don't know, OpenCL or something else depending on like for video encoding you'd maybe use OpenCL. But that's the biggest limitation where a lot of the sort of so called AI tasks are reliant on CUDA to operate at any reasonable speed. And so until there's a big push to move away from that, it's Nvidia GPUs all the way down. And maybe the push is export control. Maybe the groups in China that need a higher volume of GPUs than they're able to easily get eventually say, okay, let's put all of our resources on trying to use OpenCL or use something other, Pytorch or whatever. So that may be the direction it goes.

[Ed Zitron]

Yeah, it does actually feel like CUDA is the thing that needs to be broken here, for better or for worse. I'm just saying that there's a lot of talk about, oh, making more powerful chips here and there with AMD or Huawei, but it feels like CUDA really is the thing that they actually need to change. And I guess that probably explaining to the markets what CUDA is is difficult enough, but it feels that if they could move past Cuda, that would be the actual thing that we're doing.

[Steve Burke]

Yeah, it's kind of like the x86 situation where getting off of x86 just for the listeners.

[Ed Zitron]

What do you mean by that?

[Steve Burke]

Yeah, so your average computer is very likely an x86 computer, which is a specific microarchitecture that has to do with how software runs and interacts with the hardware and the other software on the system. And so it's kind of like a prerequisite for. You might have an application that requires Windows to be compatible. And this is another one of those types of foundational prerequisites. Okay. X86 as opposed to, for example, ARM. And ARM laptops made kind of a splash a while ago because they were trying to basically assert that, hey, look, we can run stuff that typically would only run on an old x86 microarchitecture, and now we can run it on ARM. And so it's. That is something where intel and AMD, although mostly intel, have a vested interest in keeping everything on x86. And likewise Nvidia has an interest in Keeping things on Cuda. 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 kind of, it is a chicken or the egg problem where it's kind of like, well, okay, you know, on one hand you don't want a company to develop a monopoly only because there's some kind of anti competitive practice that's keeping them in place. On the other hand, you don't want to punish a company either for inventing something that's just better. And the problem we run into with software is the developers need to choose what to support and a lot of times they choose Nvidia and maybe not something else because if you have limited resources, you're going to go with what 90% of the market has. It's kind of self fulfilling, it's a feedback loop basically. So to expand it to something like Huawei, they would have to break that Cuda. I don't know if you want to call it a moat or something like that or a walled garden, I guess either one of those or a walled garden with a moat around it. But they would have to break that down to, to really become more viable and increase the performance.

[Ed Zitron]

So before we go, did you catch any Blackwell out there or any signs that Blackwell would even make it out there?

[Steve Burke]

Yeah. So in addition to the 50 90s, which are Blackwell, as far as like the high end server stuff, we did work with, so there's two companies we worked with here, one of them we physically visited in Taiwan and there was another one we were talking to in Singapore. And what we learned is that there is some intermediary, basically pass throughs that can happen through for example a Taiwanese testing agency where a Chinese company might ask them to purchase Blackwell servers or high end hopper servers and bring them into Taiwan under their company, perform testing or pre testing on them, assembly, whatever, packaging. Whether it's a facade or not, basically the stated purpose is make sure it all works and then once it does, forward that shipment to their customer, the Taiwanese company's customer in China. And so that would allow them to potentially get into China. And so in that situation, yeah, we were shown a room filled with e.g. gB or Grace Blackwell servers that were being tested and prepped.

[Ed Zitron]

Yeah, well I'm gonna, I think we should wrap it there, Steve. So the status of the video right now as we record this is, it's offline. But by the time this goes live, you know, in September 3rd, it will go up. Hopefully it's back on.

[Steve Burke]

Where can people support you gamers? Nexus. Just the YouTube channel is the best place to go. And yeah, hopefully it's back up within should be within a couple days of you posting this. Unless Bloomberg submits a files a lawsuit in which case they'll hear about, you know, everyone will hear about it.

[Ed Zitron]

Oh, and they'll hear about it from me as well. This is utter bullshit what Bloomberg is doing. It's ridiculous. But you have been listening to Better Offline. I'm Ed Zitron. Steve, thank you so much for joining us. And yeah, we're gonna do something in a couple months as well. But always a pleasure to have you man.

[Steve Burke]

Thank you.

[Ed Zitron]

Right. Thanks so much. Thank you for listening to Better Offline. The editor and composer of the Better Offline theme song is Mattasowski. You can check out more of his music and audio [e-mail] M A T T O S O W S K-I dot com. You can email me at easyteroffline.com or visit betteroffline.com to find more podcast links and of course my newsletter. I also really recommend you go to chat where's your ed.app to visit the discord and go to r betteroffline to check out our Reddit. Thank you so much for listening. Better Offline is a production of Cool Zone Media.

[Steve Burke]

For more from Cool Zone Media, Visit.

[Aaron or Sarah Foster]

Our website coolzonemedia.com or check us out.

[Steve Burke]

On the iHeartRadio app, Apple Podcasts or.

[Aaron or Sarah Foster]

Wherever you get your podcast us.

[The Puzzler Host]

Let's start with a quick puzzle. The answer is Ken Jennings appearance on the puzzler with A.J. jacobs. The question is what is the most entertaining listening experience in podcast land? Jeopardy truthers believe in?

[Ed Zitron]

I guess they would be conspiracy theorists.

[The Puzzler Host]

That's right.

[Steve Burke]

They give you the answers and you still blew it.

[The Puzzler Host]

The Puzzler listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Dr. Scott Barry Kaufman]

I'm Dr. Scott Barry Kaufman, host of the Psychology Podcast. Here's a clip from an upcoming conversation about how to be a better you. When you think about emotion regulation, you're not going to choose an adaptive strategy which is more effortful to use unless you think there's a good outcome. Avoidance is easier. Ignoring is easier. Denial is easier. Complex problem solving takes effort. Listen to the Psychology podcast on the iHeartRadio app, Apple Podcasts or wherever you get your podcasts.

[Aaron or Sarah Foster]

We're siblings like you fight, you disagree. It's really hard to be in a judge. You judge each other. You lead differently, and we've gotten to that edge.

[Simone Boyce]

Hey, I'm Simone Boyce, host of the Bright side, and this week I'm joined by Hollywood power sisters Erin and Sarah Foster. They're getting real about boundaries, rejection, plus what's next for their hit Netflix series. Nobody wants this. Listen to the Bright side on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Emily Tish Sussman]

Have you ever wished for a change but weren't sure how to make it? Maybe you felt stuck in a job, a place, or even a relationship. I'm Emily Tish Sussman, and on she Pivots, I dive into the inspiring pivots of women who have taken big leaps in their lives and careers.

[Simone Boyce]

I'm Gretchen Whitmer.

[Steve Burke]

Jody Sweetie, Monica Padme.

[Elaine Welteroth]

Elaine Welteroth. Learn how to get comfortable pivoting because your life is going to be full of them.

[Emily Tish Sussman]

Listen to these women and more on she Pivots now on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

[Simone Boyce]

This is an iHeart podcast.