A security firm was able to spot 32 of the high-powered chips within the state-owned telecom company's network, but it can't pinpoint where they are physically located.
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However, banning companies from buying Nvidia's high-performance GPUs and AI data center chips hasn't always worked. In 2025, it was reported that Chinese companies smuggled $1 billion worth of Nvidia AI chips into the country in three months. At the time, the B200 chips were the most sought-after, but some distributors were already gearing up to sell B300-series chips when they became available.
While the latest finding shows that the proliferation of export-controlled chips into China continues to be an issue, Nvidia has downplayed the report but didn't deny the findings. "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," an Nvidia spokesperson told Tom's Hardware. "With tens of millions of GPUs in service in approved countries, this report again demonstrates that smuggling is a nonfactor, blocked by governments on both sides of the globe."
It's unknown how B300 chips found their way into China Telecom's server racks, nor can Lava confirm exactly where within the company's network they are located. But they are there, with Lava identifying them via Nvidia's own DCGM Exporter tool. The software can be installed by data center operators and is used to monitor server health and performance, and while designed for internal use, it can oftentimes be accessed beyond the data center's network. Oddly, it doesn't always require password authentication, either. Nvidia previously confirmed it was working on a tool that would allow its chips to be located , but it is yet to be released.
It's easy to see why Chinese firms are keen to get their hands on the Blackwell Ultra B300. Announced in March of last year , the data center GPU is one of the most powerful on the planet, offering huge performance gains with 50% more memory and FP4 compute than the previous-generation B200. At the time, Nvidia touted that the chip was "built for the age of reasoning," while name-checking more sophisticated AI LLMs like DeepSeek R1. At the time of its announcement, the B300 was expected to ship by the end of 2025, and it didn't take long for it to become hot property. In August 2026, nine people were indicted in Taiwan over the illegal export of B300 GPUs to China. This came just days after Supermicro confirmed that it had fired several employees following an investigation into smuggling. The complicated smuggling process included the use of a Taiwanese server trading firm called Flying Tiget Tech — a firm with whitelisted status for GPU purchases.
Nvidia employee implicated in escalating AI GPU smuggling scandal
Key considerations
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Reference reading
- https://www.tomshardware.com/tech-industry/data-centers/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/data-centers/illegal-nvidia-blackwell-ultra-b300-gpus-found-inside-state-owned-china-telecoms-network-nvidia-says-chip-smuggling-a-drop-in-the-bucket-insists-smuggling-remains-a-nonfactor#main
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