Export Controls: 32 Barred Nvidia Chips Found in Chinese Network

Israeli security firm Lava has identified 32 Nvidia Blackwell Ultra B300 chips operating within the network of China Telecom. The state-owned telecommunications provider is a primary target of U.S. export restrictions, which generally prohibit the sale of this class of advanced hardware to Chinese entities. The discovery highlights the ongoing difficulty in enforcing limits on the flow of high-performance computing equipment across international borders.

Current regulations allow chips of this tier to be sold only to whitelisted buyers. These buyers must agree not to transfer the hardware to sanctioned parties, including those located in China. Previous reports indicated that enforcement gaps allowed for substantial smuggling. A report from 2025 estimated that Chinese companies smuggled $1 billion worth of Nvidia AI chips over a three-month period. While B200 processors were the primary target at that time, distributors were already positioning themselves to handle B300-series parts once they became available.

Nvidia acknowledged Lava's findings but characterized the incident as minor relative to the total volume of compute hardware in approved markets. A spokesperson stated that recent court cases have shown an "insignificant diversion of controlled US products," citing a rate of less than 0.5 percent. The company noted that tens of millions of GPUs are currently in service in approved countries, suggesting that smuggling remains a small fraction of the total market.

Lava detected the chips using Nvidia's DCGM Exporter, a software tool designed for data center operators to monitor server health. Although intended for internal use, the tool can often be accessed from outside the data center without a password. Lava has not determined the specific location of the chips within China Telecom's network or the exact path they took to reach the country. Nvidia is developing a proprietary tool to track its chips, but that software has not yet been released.

The B300 GPU, announced in March 2025, offers 50 percent more memory and FP4 compute performance than the B200. Nvidia positioned the chip for complex large language models, including DeepSeek R1. The hardware was expected to ship by the end of 2025 and quickly became a high-demand item for buyers seeking advanced AI capabilities.

Regulatory actions have intensified following these discoveries. In August 2026, nine individuals were indicted in Taiwan for the illegal export of B300 GPUs to China. The indictments followed an investigation by Supermicro, which fired several employees after uncovering a smuggling scheme. The operation involved a Taiwanese server trading firm called Flying Tiget Tech, which held whitelisted status for purchasing GPUs.

Market conditions continue to shift as demand for Nvidia silicon rises. Prices for older hardware have increased sharply, with servers built on the five-year-old A100 architecture tripling in cost. Some buyers have begun retooling gaming GPUs to run AI workloads in response to the crackdown on smuggled high-end processors.