Nvidia Chip Smuggling Claims Surface Inside China Telecom Network
Nvidia has responded to reports that its restricted chips were found in a state-owned Chinese network, calling such activities statistically insignificant.
By Noor Haddad ·
Israeli security firm Lava says it has identified 32 Nvidia Blackwell Ultra B300 units operating within the network of China Telecom, a state-owned telecommunications provider. The discovery was first noted by a report from The Information. These specific high-performance chips are subject to strict U.S. export controls, which restrict their sale to whitelisted buyers who commit not to shipping them to sanctioned nations, including China.
Despite these restrictions, the movement of Nvidia’s AI accelerators into China has been a persistent challenge. In 2025, reports indicated that approximately $1 billion worth of Nvidia AI chips entered the country over a three-month period. While B200 units were the primary target at that time, distributors were already arranging the sale of B300-series chips as they became available.
Nvidia has acknowledged the finding regarding the B300s but characterized the overall volume of unauthorized exports as negligible. A company spokesperson stated, “Governments, researchers, and media have all found insignificant diversion of controlled US products, less than one half of one percent in recent court cases, a drop in the bucket compared to the ocean of domestic compute China already has.” The spokesperson added that with tens of millions of GPUs active in approved countries, “smuggling is a nonfactor, blocked by governments on both sides of the globe.”
The specific method by which the B300 chips entered China Telecom’s server racks remains unclear, and Lava cannot pinpoint their precise location within the network infrastructure. However, Lava identified the hardware through Nvidia’s own DCGM Exporter tool. Designed for internal data center use to monitor server health, this software can sometimes be accessed from outside the network, often without password authentication.
The B300 remains a highly sought-after component. Announced in March of last year, it offers significant performance improvements, including 50% more memory and FP4 compute compared to the prior B200 model. Nvidia previously stated the chip was “built for the age of reasoning,” specifically referencing sophisticated AI LLMs like DeepSeek R1. The chip began shipping by the end of 2025.
Attempts to circumvent export controls have led to recent legal actions involving this hardware. In August 2026, nine individuals were indicted in Taiwan for illegally exporting B300 GPUs to China. This followed shortly after Supermicro confirmed it had fired employees related to an internal investigation into smuggling, which involved a Taiwanese server trading firm named Flying Tiget Tech.
The demand for Nvidia hardware continues to drive prices upward, even for older generations. The company’s A100 servers, now five years old, have tripled in price and can cost up to $82,000. This scarcity and the enforcement of export controls have led some to attempt retooling gaming GPUs for AI workloads.
Source: Tom's Hardware
