Nvidia says leaked B300 chips in China are a minor issue

Nvidia has dismissed recent reports of illegal chip exports as a minor anomaly, arguing that the discovery of 32 Blackwell Ultra B300 graphics processing units inside the network of China Telecom does not significantly impact the broader market. The statement comes after Lava, an Israeli security firm, identified the high-performance chips within the infrastructure of the state-owned telecommunications provider. This finding highlights the ongoing challenge of enforcing U.S. export controls on advanced artificial intelligence hardware destined for Chinese data centers.

The B300 chips are subject to strict U.S. export regulations that generally bar their sale to sanctioned parties in China. Under current rules, these components can only be sold to whitelisted buyers who agree not to transfer them to prohibited entities. The presence of these specific units in a major Chinese telecom network raises questions about the effectiveness of the current enforcement mechanisms. A report by The Information noted that these chips have been explicitly barred from export, making their appearance in the country a notable breach of protocol.

Lava confirmed the presence of the 32 units by using Nvidia's own DCGM Exporter tool, a software utility designed for data center operators to monitor server health and performance. While intended for internal use, the tool can sometimes be accessed from outside the data center network and frequently does not require password authentication. Lava was able to pinpoint the chips through this method, although the company could not determine the exact physical location within China Telecom's vast network. Nvidia has previously acknowledged it is developing a more robust tool to locate its chips but has not yet released it.

In response to the findings, an Nvidia spokesperson stated that the diversion of controlled U.S. products has been insignificant in recent legal cases. The company noted that such instances represent less than half of one percent of total shipments. "A drop in the bucket compared to the ocean of domestic compute China already has," the spokesperson said, adding that with tens of millions of GPUs in service in approved countries, smuggling remains a non-factor. Nvidia emphasized that governments on both sides of the globe are actively working to block these illicit transfers.

The Blackwell Ultra B300 is a premier data center GPU announced in March of last year. It offers significant performance improvements over its predecessor, the B200, including 50% more memory and higher FP4 compute capabilities. Nvidia marketed the chip as being built for the age of reasoning, citing its suitability for sophisticated large language models like DeepSeek R1. The chip was expected to ship by the end of 2025 and quickly became a highly sought-after commodity in the global tech market.

The demand for these advanced chips has fueled a complex smuggling industry. In August 2026, nine individuals in Taiwan were indicted for the illegal export of B300 GPUs to China. This legal action occurred shortly after Supermicro confirmed it had terminated several employees following an internal investigation into smuggling activities. The illicit trade often involves intermediaries with whitelisted status, such as a Taiwanese server trading firm identified as Flying Tiget Tech, which facilitated the movement of the hardware.

This is not the first time Nvidia has faced issues with chip diversion. In 2025, it was reported that Chinese companies smuggled approximately $1 billion worth of Nvidia AI chips into the country in just three months. At that time, the B200 was the most in-demand model, but distributors were already preparing for the B300 series. The persistence of these leaks underscores the high value placed on Nvidia's silicon in the race to build advanced AI infrastructure.

The scarcity of new chips has also driven up the price of older hardware. Nvidia's A100 servers, which are five years old, have seen their prices triple and can now cost up to $82,000. In response to the crackdown on new chip smuggling, some operators have resorted to retooling gaming GPUs to run AI workloads where possible. This shift reflects the intense competition for computing power in the current economic landscape.

For California-based tech investors and industry observers, the situation illustrates the tension between strict regulatory controls and the insatiable demand for AI computing power. While Nvidia maintains that the overall volume of smuggled chips is low, the high profile of the B300 and its role in next-generation AI models ensures that every leak makes headlines. The company's stance suggests that it views these incidents as manageable exceptions rather than systemic failures in its global supply chain.