US Dismisses 32 Nvidia B300 Chips Found in China Telecom as Minor Diversion
An Israeli security firm detected restricted hardware in a state-owned carrier's infrastructure, while Nvidia disputes the scale of the leak.
By Petra Murphy ·
U.S. export rules prohibit certain high-performance graphics cards from reaching Chinese buyers, yet 32 such units are currently running inside the network of China Telecom. An Israeli security firm named Lava identified the hardware this week. The chips are Nvidia Blackwell Ultra B300 models, which fall under strict licensing requirements for sales to the country.
Lava reported the discovery through The Information. The finding complicates the current enforcement framework. Under existing regulations, these chips can only be sold to whitelisted buyers. Those buyers must agree not to transfer the hardware to sanctioned parties, including entities in China. A 2025 report estimated that Chinese companies smuggled $1 billion worth of Nvidia AI chips over a three-month period. At that time, B200 processors were the primary target, but distributors were already preparing for the B300 series.
Nvidia did not challenge the technical findings. A company spokesperson told Tom's Hardware that the diversion represents a small fraction of total compute power. The official stated that recent court cases show an "insignificant diversion of controlled US products, less than one half of one percent." The spokesperson argued that with tens of millions of GPUs in service in approved countries, smuggling is "a nonfactor, blocked by governments on both sides of the globe."
The exact path the chips took to the Chinese data center remains unclear. Lava has not identified the specific location within the China Telecom network. The firm used Nvidia's DCGM Exporter software to detect the hardware. This tool is designed for internal health monitoring but is often accessible from outside the network without a password. Nvidia is developing a dedicated tracking tool, but it has not yet been released.
The B300 chip was announced in March 2025. It offers 50 percent more memory and FP4 compute power than the previous B200 model. Nvidia marketed the device as "built for the age of reasoning" to support advanced large language models. The unit was expected to ship by the end of 2025 and quickly became a high-demand asset.
Legal actions have increased recently. In August 2026, prosecutors in Taiwan indicted nine people for illegally exporting B300 GPUs to China. These indictments followed days after Supermicro confirmed it fired several employees following a smuggling investigation. The scheme involved a Taiwanese server trading firm called Flying Tiget Tech, which held whitelisted status for GPU purchases.
Rising demand for Nvidia silicon has driven up prices across the market. Servers built on the five-year-old A100 architecture have tripled in cost. Some buyers have reportedly retooled gaming GPUs to handle AI workloads as they seek alternatives to the restricted hardware.
