Nvidia's Response to Smuggling Report: 'A Drop in the Bucket'

Nvidia has responded to reports that its restricted Blackwell Ultra B300 processors were discovered inside the network of state-owned China Telecom. A spokesperson for the company characterized the volume of such illicit activity as negligible, stating that court cases have documented diversion rates of less than one half of one percent. The statement sought to frame the issue as insignificant when compared to the massive volume of approved compute Nvidia provides to other nations.

The company's comment followed a report by The Information, which detailed the identification of 32 Blackwell Ultra B300 chips within China Telecom's infrastructure. Israeli security firm Lava discovered the hardware using Nvidia's own DCGM Exporter tool, a program designed for data center operators to monitor server performance. The software is intended for internal use but is sometimes accessible from outside the data center network, and does not always require a password. Nvidia has confirmed it is developing a dedicated tool to locate its chips, though it has not yet been released.

The presence of these specific chips is significant because they are subject to strict U.S. export controls. Regulations prohibit the sale of high-performance AI data center chips to Chinese entities or to whitelisted buyers who refuse to agree not to export them to sanctioned parties. Despite these restrictions, the movement of restricted hardware into China has been a recurring issue. In 2025, reports indicated that Chinese companies had smuggled $1 billion worth of Nvidia AI chips into the country within a three-month period.

The attempt to acquire the Blackwell Ultra B300 is driven by the hardware's capabilities. Announced in March 2025, the data center GPU is among the most powerful available, offering 50% more memory and FP4 compute than the previous-generation B200. Nvidia stated the chip was “built for the age of reasoning.” Because the component is designed to ship only to approved parties, its appearance in China Telecom's servers represents a breach of export policy. It remains unknown how the 32 chips entered China Telecom's network or where they are located within its infrastructure.

Efforts to move restricted silicon across borders have led to legal consequences for individuals and corporate actions against employees. In August 2026, nine people were indicted in Taiwan over the illegal export of B300 GPUs to China. This action followed an investigation by Supermicro into smuggling, which resulted in the company firing several employees. The smuggling process involved a Taiwanese server trading firm, Flying Tiget Tech, which held whitelisted status for GPU purchases.

The demand for Nvidia's technology remains high despite export restrictions. The company's A100 servers have tripled in price to $82,000 despite being five years old. In response to the crackdown on smuggling, some have resorted to retooling gaming GPUs to run AI workloads.