Nvidia slashes list of authorized customers in Asia in a bid to reduce AI chip smuggling, report claims
Supermicro denies that its offices were raided by Taiwanese authorities in Nvidia GPU smuggling case
Prosecutors consider him strongly suspected of the charges, with a very real risk for attempted flight, destruction of evidence, and collusion with witnesses.
"Smuggling is a nonstarter," an Nvidia spokesperson told Tom's Hardware . "We primarily sell our products to well-known partners, including OEMs, who help us ensure that all sales comply with U.S. export control rules. Even relatively small exporters and shipments are subject to thorough review and scrutiny on both sides of the globe, and any diverted products would have no service, support, or updates."
Although authorities are clear that they are not investigating Nvidia as a company, an employee's involvement in the scheme will put a spotlight on Nvidia's actions and raise further questions about any additional involvement it or its employees may have had.
CEO Jensen Huang said in May that there was "no evidence of any AI chip diversion," but the situation has obviously changed since then. At the beginning of June, U.S. Senator Elizabeth Warren wrote to Nvidia general counsel Tim Ter, asking for evidence that supported Huang's claims.
At the time of writing, there is a legitimate channel for Chinese firms to purchase Nvidia GPUs, but they're not the most cutting-edge Blackwell chips. There are older Nvidia GPUs granted licenses that are reviewed on a case-by-case basis, with the U.S. government taking a 25% revenue share cut of the sales. This reportedly adds up to just 75,000 units for 10 different Chinese companies – a relatively trivial amount of GPUs for Nvidia.
This is for the China-only, neutered Nvidia GPUs like H20 and H100s — not the cutting-edge GB200 and GB300 Blackwell-based stacks available to Western AI developers.
But this legal demand comes despite the lack of cutting-edge hardware options, the regulatory hoops that those involved need to jump through, and the Chinese government using carrots and sticks to encourage the use of domestic chip options.
That's because for certain tasks, Nvidia GPUs remain the best. For training, there's nothing that can compete with Nvidia's options. Chinese firms like Deepseek have tried previously, but they had to switch back to Nvidia when Chinese alternatives didn't measure up. Although some post-training fine-tuning is now possible on Chinese hardware, the Moonshot's headline-grabbing Kimi K3 was trained on potentially smuggled Nvidia Blackwell GPUs .
Considering the impact that Kimi K3 has had on the AI industry, it's hard not to imagine other Chinese AI developers looking to have their own "Deepseek moment" wouldn't search out access to Blackwell GPUs themselves.
The net may be closing on the Supermicro smuggling scheme, but the incentive is there for others to take its place, if they haven't already.
Update: July 30, 2026, 2:45 AM (PT) — Headline edited to reflect broader trends in AI GPU smuggling, altered passage to clarify that multiple schemes were previously in operation.
Jon Martindale is a contributing writer for Tom's Hardware. For the past 20 years, he's been writing about PC components, emerging technologies, and the latest software advances. His deep and broad journalistic experience gives him unique insights into the most exciting technology trends of today and tomorrow. ","collapsible":{"enabled":true,"maxHeight":250,"readMoreText":"Read more","readLessText":"Read less"}}), "https://slice.vanilla.futurecdn.net/13-4-25/js/authorBio.js"); } else { console.error('%c FTE ','background: #9306F9; color: #ffffff','no lazy slice hydration function available'); } Jon Martindale Freelance Writer Jon Martindale is a contributing writer for Tom's Hardware. For the past 20 years, he's been writing about PC components, emerging technologies, and the latest software advances. His deep and broad journalistic experience gives him unique insights into the most exciting technology trends of today and tomorrow.
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/nvidia-employee-implicated-in-escalating-supermicro-smuggling-scandal-but-demand-only-intensifies-for-nvidia-hardware#main
- https://www.tomshardware.com/my-account
- Seagate to start qualifying record-setting 50TB HDDs in 2027 — most drives are sold out through 2028
- Industry Leaders Unite in Open Secure AI Alliance for AI Safety and Security
- Why an MMO mouse isn’t just for gaming — make use of the myriad of buttons for enhancing your productivity workflows in popular software applications
- NVIDIA Vera Rubin Driving Performance Per Watt, Lowest Token Cost for Partners Worldwide
- AI companies are reportedly shredding millions of books after using them to train AI models — tech giants outsource to middlemen to secretly buy up books for tr
Informational only. No financial advice. Do your own research.