AI Chip Smuggling: B300s Found in State-Owned Chinese Network

Israeli security firm Lava has confirmed the presence of thirty-two Nvidia Blackwell Ultra B300 graphics processing units inside the network of China Telecom, a state-owned telecommunications provider. The discovery is significant because U.S. export controls have explicitly barred these specific chips from leaving the country. These high-performance components are restricted to whitelisted buyers who agree not to resell them to sanctioned parties, making their appearance in a major Chinese data center a notable violation of current trade regulations.

The identification process relied on Nvidia’s own DCGM Exporter tool, a software utility designed for data center operators to monitor server health and performance. Although intended for internal use, the tool can sometimes be accessed from outside the data center’s network without password authentication. Lava used this accessibility to pinpoint the B300 chips within the infrastructure. It remains unclear exactly where in the network the chips are located or the specific method used to smuggle them into the server racks.

Nvidia has responded to the report by downplaying the scale of the issue. A company spokesperson stated that the diversion of controlled U.S. products has been found to be insignificant in recent court cases, often representing less than 0.5 percent of total volume. The spokesperson characterized the finding as "a drop in the bucket compared to the ocean of domestic compute China already has," asserting that with tens of millions of GPUs in service in approved countries, smuggling remains a non-factor effectively blocked by governments on both sides of the Pacific.

This incident follows a pattern of high-value chip seizures. In 2025, reports indicated that Chinese companies smuggled approximately $1 billion worth of Nvidia AI chips into the country over a three-month period. While the B200 was the primary target at that time, distributors had already begun positioning themselves to sell the newer B300 series as soon as it became available. The Blackwell Ultra B300, announced in March of last year, offers 50% more memory and FP4 compute capabilities than its predecessor, the B200, making it a critical asset for advanced AI workloads.

The push to acquire these chips has intensified in recent months. In August 2026, nine individuals in Taiwan were indicted for the illegal export of B300 GPUs to China. This legal action occurred shortly after Supermicro confirmed it had dismissed several employees following an internal investigation into smuggling activities. The complex scheme involved a Taiwanese server trading firm with whitelisted status, known as Flying Tiget Tech, which was used to facilitate the movement of hardware.

The high demand for Nvidia silicon has driven up prices across the board, even for older models. A100 servers, which are five years old, have seen their prices triple, with some units reaching up to $82,000. This scarcity has led some operators to retool gaming GPUs for AI tasks where possible. Nvidia is currently developing a dedicated tool to help locate its chips globally, though it has not yet been released to the public.

The latest findings underscore the ongoing challenge of enforcing export controls in the AI hardware market. While Nvidia maintains that the overall volume of smuggled chips is small relative to the total installed base, the presence of next-generation B300s in a state-owned network highlights the continued ingenuity of those seeking to bypass trade restrictions.