Chinese State Telecom Runs 32 Banned Nvidia Chips

Lava, an Israeli security firm, reported the detection of 32 Nvidia Blackwell Ultra B300 chips operating within the infrastructure of China Telecom.

The state-owned telecommunications provider hosts these processors despite current US export controls that restrict sales of this chip class to non-whitelisted buyers. The finding was first detailed by The Information. Under existing regulations, approved purchasers must agree not to transfer the hardware to sanctioned parties, including entities in China. A 2025 report indicated that Chinese companies smuggled $1 billion worth of Nvidia AI chips in just three months. While B200 processors were the primary target then, distributors were already positioning for the B300 series.

Nvidia did not challenge Lava's detection results but characterized the impact as minor. A spokesperson told Tom's Hardware that recent court cases show an "insignificant diversion of controlled US products, less than one half of one percent." The company noted that tens of millions of GPUs remain in service in approved countries. The spokesperson argued that the report "demonstrates that smuggling is a nonfactor, blocked by governments on both sides of the globe." Nvidia maintains that its domestic compute resources in China dwarf the number of smuggled units.

The specific pathway for the chips to reach China Telecom remains unclear. Lava could not pinpoint the exact location of the hardware within the network. The firm identified the chips using Nvidia's DCGM Exporter, a monitoring tool designed for internal server health checks. This software is often accessible from external networks and frequently lacks password protection. Nvidia has acknowledged it is developing a proprietary tool to locate its chips, but that software has not yet been released.

The B300 GPU, announced in March 2025, offers 50% more memory and FP4 compute capability than its B200 predecessor. Nvidia marketed the chip as "built for the age of reasoning," citing compatibility with advanced models like DeepSeek R1. The product was expected to ship by the end of 2025 and quickly became a high-demand item in the market.

Enforcement actions have intensified in the wake of such leaks. In August 2026, nine individuals in Taiwan faced indictment for the illegal export of B300 GPUs to China. These charges followed Supermicro's confirmation that it fired several employees after an investigation into smuggling activities. The alleged scheme involved a Taiwanese server trading firm named Flying Tiget Tech, which held whitelisted status for GPU purchases.

High demand for Nvidia silicon continues to drive up prices across the industry, affecting even older hardware. Servers built around the five-year-old A100 chip have seen their prices triple. As the crackdown on smuggling persists, some buyers have reportedly modified gaming GPUs to handle AI workloads.