Export controls: Nvidia chips surface inside China Telecom network

Despite U.S. regulations designed to keep advanced computing hardware out of Chinese hands, restricted Nvidia technology has surfaced inside the network of China Telecom, a state-owned telecommunications carrier. Israeli security firm Lava identified 32 Nvidia Blackwell Ultra B300 chips located within the company’s systems, a finding reported by The Information. These specific processors are subject to strict export controls that limit sales to whitelisted buyers who agree not to transfer the hardware to sanctioned parties, including entities in China.

The discovery highlights the ongoing difficulty of enforcing restrictions on high-performance artificial intelligence hardware. While the U.S. has blocked companies from selling these advanced GPUs to China, enforcement has not been absolute. In 2025, it was reported that Chinese companies successfully smuggled $1 billion worth of Nvidia AI chips into the country over three months. Although the B200 was the most sought-after model at that time, distributors were already preparing to sell B300-series chips as they became available.

Nvidia has responded to the report by minimizing the scale of the issue rather than disputing the findings. A company spokesperson stated that governments, researchers, and media have all found an insignificant diversion of controlled U.S. products, noting that such diversion accounts for less than one half of one percent in recent court cases. The spokesperson described the situation as "a drop in the bucket compared to the ocean of domestic compute China already has" and asserted that with tens of millions of GPUs in service in approved countries, smuggling remains a nonfactor blocked by governments on both sides of the globe.

Lava identified the chips using Nvidia's own DCGM Exporter tool, software designed for data center operators to monitor server health and performance. Although intended for internal use, the tool can often be accessed beyond the data center's network and does not always require password authentication. It remains unknown how the B300 chips arrived in China Telecom's server racks or their specific location within the network. Nvidia previously confirmed it was working on a tool to locate its chips, but it has yet to be released.

The Blackwell Ultra B300, announced in March of last year, is among the most powerful data center GPUs available, offering 50% more memory and FP4 compute than the previous-generation B200. The chip is built for advanced reasoning models and began shipping by the end of 2025. The demand for these processors has led to significant legal issues for those attempting to bypass export controls. In August 2026, nine people were indicted in Taiwan over the illegal export of B300 GPUs to China. This followed an investigation by Supermicro, which confirmed it had fired several employees regarding a smuggling operation involving a Taiwanese server trading firm.

The high value of Nvidia’s silicon has driven prices for even older hardware to surge. A100 servers, despite being five years old, have tripled in price and can cost up to $82,000. The ongoing crackdown on chip smuggling has prompted some to retool gaming GPUs for AI workloads in response to the restrictions.