Restricted AI Chips Surface Inside China Telecom's Network
Security researchers have located dozens of export-controlled Nvidia processors within a state-owned Chinese telecommunications provider's infrastructure.
By Christopher Reed ·
U.S. export controls aim to keep specific high-end computer chips out of Chinese data centers, but a recent discovery indicates that some have bypassed these restrictions. According to a report by The Information, Israeli security firm Lava identified 32 Nvidia Blackwell Ultra B300 processors operating within the network of China Telecom, a state-owned telecommunications service provider.
The discovery is significant because these specific chips are subject to U.S. export regulations, which prohibit their sale to China. Nvidia maintains that such diversions are minimal compared to its total output. A company spokesperson stated, "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." The spokesperson added, "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."
The timeline of how these chips arrived in China Telecom's server racks remains unclear, and Lava cannot specify their exact location within the company's network. The detection occurred through Nvidia's own DCGM Exporter tool, a program intended for internal data center monitoring. Because this software is sometimes accessible outside the network and does not always require password authentication, it can inadvertently reveal server hardware details. Nvidia has previously acknowledged developing a tool to locate its chips, but that specific software has not yet been released.
The B300 processors are highly sought after due to their performance capabilities. Announced in March 2025, the chip provides significant upgrades over the previous generation, featuring 50 percent more memory and higher FP4 compute capabilities than the B200. Nvidia described the hardware as "built for the age of reasoning," highlighting its utility for advanced artificial intelligence models. By August 2026, the high demand for these chips led to legal action against nine individuals in Taiwan regarding illegal exports, while Supermicro fired several employees following an internal investigation into smuggling.
The pressure to obtain Nvidia hardware is driven by extreme scarcity and the refusal to release older technology. Prices for Nvidia's five-year-old A100 servers have tripled, reaching costs of up to $82,000. As a result, some parties seeking to bypass export restrictions have attempted to repurpose gaming GPUs for artificial intelligence workloads.
Source: Tom's Hardware
