32 Restricted Nvidia Chips Discovered in Chinese Telecom Network
Security firm Lava identified 32 Blackwell Ultra B300 GPUs inside China Telecom's infrastructure, prompting Nvidia to call the find a minor anomaly in the broader market.
By Malik Salazar ·
Israeli security firm Lava has identified 32 Nvidia Blackwell Ultra B300 graphics cards operating within the network of China Telecom. The discovery raises immediate questions about export compliance. China Telecom is a state-owned telecommunications provider, and the B300 chips are currently barred from export to the country by U.S. controls. The finding suggests that restricted hardware has once again bypassed regulatory barriers to reach a major Chinese data center.
U.S. export rules dictate that these high-performance GPUs can only be sold to whitelisted buyers. These buyers agree not to transfer the technology to sanctioned parties, including entities in China. Despite these strict regulations, the flow of Nvidia silicon into China has remained persistent. In 2025, reports indicated that Chinese companies smuggled $1 billion worth of Nvidia AI chips into the country in just three months. While the B200 was the primary target at that time, distributors had already begun preparing to move B300-series chips once they became available.
Nvidia has responded to the news by downplaying the significance of the 32 chips found. The company did not deny Lava's findings but characterized the incident as a minor issue. A spokesperson for Nvidia stated that governments and researchers have found insignificant diversion of controlled U.S. products. The spokesperson noted that in recent court cases, the diversion rate was less than half of one percent. This figure, Nvidia argues, is a drop in the bucket compared to the vast amount of domestic compute capacity China already possesses.
The company further emphasized that tens of millions of its GPUs are in service in approved countries. Nvidia insists that this report demonstrates that smuggling is a non-factor, a position it says is supported by enforcement actions from governments on both sides of the Pacific. The firm maintains that the overall impact on the market remains negligible despite the specific discovery within China Telecom's infrastructure.
The exact method by which the B300 chips entered the Chinese network remains unclear. Lava has not confirmed the specific location of the chips within China Telecom's broader system. However, the security firm confirmed the presence of the hardware using Nvidia's own DCGM Exporter tool. This software is installed by data center operators to monitor server health and performance. Although intended for internal use, the tool is frequently accessible from outside the data center network. In some cases, it does not even require password authentication, creating a potential security gap that allowed for external detection.
Nvidia has acknowledged the utility of such monitoring tools. The company previously confirmed it was developing a specific tool to help locate its chips. That tool has not yet been released. The current reliance on the DCGM Exporter highlights the ongoing challenge of tracking hardware once it leaves the factory and enters the complex global supply chain.
Chinese firms remain highly motivated to acquire the Blackwell Ultra B300. Announced in March of last year, the chip is among the most powerful data center GPUs available. It offers significant performance improvements over its predecessor, the B200. Specifically, the B300 provides 50 percent more memory and double the FP4 compute capability. Nvidia marketed the chip as built for the age of reasoning, citing advanced AI models like DeepSeek R1 as primary use cases.
The B300 was expected to ship by the end of 2025. It quickly became a sought-after commodity. In August 2026, nine individuals in Taiwan were indicted for the illegal export of B300 GPUs to China. This legal action occurred days after Supermicro confirmed it had fired several employees following an internal investigation into smuggling. The illicit process involved a Taiwanese server trading firm called Flying Tiget Tech, which held whitelisted status for GPU purchases.
The high demand for Nvidia's latest silicon has also driven up the price of older hardware. A100 servers, which are five years old, have seen their prices triple. These units can now cost up to $82,000. The intense crackdown on smuggling has led some operators to retool gaming GPUs to run AI workloads where possible. This trend underscores the critical role these chips play in modern AI infrastructure and the lengths to which various parties will go to secure them.
Despite the ongoing challenges, Nvidia maintains its stance that the 32 chips found in China are a small part of a larger picture. The company continues to focus on the tens of millions of GPUs deployed in compliant markets. For now, the discovery serves as a reminder that the global race for AI compute power remains as complex and contentious as ever, with regulatory lines constantly being tested by market demand.
