Nvidia said Thursday that datacenters built with smuggled chips are a “losing proposition” and that it does not support unauthorized products.

The statement came in response to a Financial Times report that at least $1 billion worth of its artificial intelligence chips illegally entered China.

“Trying to cobble together datacenters from smuggled products is a losing proposition, both technically and economically,” a spokesperson said in a statement to CNBC. “Datacenters require service and support, which we provide only to authorized NVIDIA products.”

According to the FT report, at least $1 billion worth of the company’s chips entered China as President Donald Trump rolled out restrictions on shipments of the company’s H20 chips to the world’s second-largest economy.

Nvidia’s B200 chips, which are prohibited from being sold to China, have become popular on the black market despite restrictions, the Financial Times reported, citing sales contracts, company filings and people familiar with the deals.

Chinese distributors began selling the chips in May to data center suppliers whose customers include Chinese AI groups, the report said.

For years, the U.S. and China have competed to lead the artificial intelligence race. China serves as a major market for chipmakers, but the U.S. has restricted many advanced processor sales there due to national security concerns.

Last week, Nvidia CEO Jensen Huang said it would soon resume selling its H20 chips to China after a breakthrough with the Trump administration on regulations.

The U.S. government had effectively blocked sales to China in April when it told the company it would require a license. The chip was created to work around previous export controls on China.

Nvidia CEO Jensen Huang has said he wants to sell more advanced chips than the H20 to China.

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