Banned Nvidia chips found in Chinese state telecom network

Israeli security firm Lava has located 32 Nvidia Blackwell Ultra B300 graphics processing units within the infrastructure of China Telecom. The state owned telecommunications carrier operates across China, and the presence of these specific chips is significant because U.S. export controls have barred their sale to the country. These processors are only legally sold to whitelisted buyers who agree not to resell them to sanctioned parties, making their appearance in a Chinese data center a notable breach of policy.

The discovery highlights the persistent difficulty of enforcing hardware export restrictions. In 2025, reports indicated that Chinese entities smuggled one billion dollars worth of Nvidia AI chips into the nation over just three months. While the B200 was the primary target during that period, distributors had already prepared for the release of the B300 series. The B300 offers substantial improvements over its predecessor, including fifty percent more memory and higher FP4 compute performance. It was originally scheduled to ship by the end of 2025 and quickly became a highly sought after asset for AI data centers.

Nvidia has responded to the findings by downplaying their impact, though the company did not dispute the fact that the chips were found. A spokesperson stated that recent court cases have shown that the diversion of controlled products is less than half of one percent. The company described this volume as a drop in the bucket compared to the massive amount of domestic compute power China already possesses. With tens of millions of GPUs in service in approved countries, Nvidia maintains that smuggling remains a non factor and is effectively blocked by governments on both sides of the Pacific.

Details regarding how the hardware entered China Telecom remain unclear. Lava has not confirmed the exact location of the servers within the network but identified the chips using Nvidia’s DCGM Exporter tool. This software is used by data center operators to monitor server health and performance. Although intended for internal use, the tool can sometimes be accessed from outside the network and does not always require password authentication. Nvidia has acknowledged it is developing a tool to locate its chips, but that solution has not yet been released.

The smuggling of B300 units has become a complex operation. In August 2026, nine individuals were indicted in Taiwan for illegally exporting these GPUs to China. This followed an investigation by Supermicro, which fired several employees after discovering internal collusion. The scheme involved a Taiwanese server trading firm called Flying Tiget Tech, which held the necessary whitelisted status to purchase the hardware. The high demand for Nvidia silicon has also driven up prices for older models. A100 servers, which are five years old, have seen their prices triple and can now cost up to eighty two thousand dollars. Some operators are even retooling gaming GPUs to handle AI workloads as a stopgap measure.

The situation underscores the ongoing tension between U.S. export policies and the global demand for advanced AI hardware. While Nvidia insists the volume of smuggled chips is small relative to the total market, the discovery in a state owned network suggests that high value components are still finding their way to restricted buyers. The use of standard monitoring tools to uncover the hardware also raises questions about the security of data center management software. As Nvidia works on a dedicated tracking solution, the B300 remains a focal point for both enforcement agencies and technology analysts watching the AI supply chain.