Lava spots 32 banned chips in state network

Israeli security firm Lava reported on Thursday that it detected 32 Nvidia Blackwell Ultra B300 chips operating within the network of China Telecom. The state-owned telecommunications provider hosts the hardware in its data centers. The discovery confirms that export-controlled processors have reached the Chinese market despite U.S. restrictions.

Current U.S. export rules limit the sale of these chips to whitelisted buyers. These buyers must agree not to transfer the hardware to sanctioned parties in China. Enforcing these limits has remained difficult. A report from 2025 stated that Chinese companies smuggled $1 billion worth of Nvidia AI chips over a three-month period. B200 processors were the primary target at that time, but distributors were already preparing for the B300 series.

Nvidia did not dispute the findings from Lava. A company spokesperson told Tom's Hardware that the incident represents an "insignificant diversion of controlled US products." The spokesperson noted that less than half of one percent of controlled products were diverted in recent court cases. The official added that this amount is small compared to the domestic compute capacity China already possesses. The spokesperson claimed that smuggling is a nonfactor because tens of millions of GPUs are in service in approved countries.

Lava detected the chips using Nvidia's DCGM Exporter software. This tool allows data center operators to monitor server health and performance. Although intended for internal use, the tool can often be accessed from outside the data center network without a password. Lava could not determine the exact location of the chips within China Telecom's infrastructure. Nvidia has confirmed it is developing a tool to locate its chips, but that software has not yet been released.

The B300 GPU was announced by Nvidia in March 2025. It provides 50% more memory and FP4 compute power than the earlier B200 model. The company described the chip as built for the age of reasoning, citing advanced large language models like DeepSeek R1. The processor was expected to ship by the end of 2025 and became highly sought after in the market.

Enforcement actions have increased recently. In August 2026, nine people were indicted in Taiwan for illegally exporting B300 GPUs to China. These indictments followed an investigation by Supermicro, which fired several employees related to the smuggling. The scheme involved a Taiwanese server trading firm named Flying Tiget Tech, which held whitelisted status for GPU purchases. Demand for Nvidia silicon has also driven up prices for older products. Servers built around the five-year-old A100 chip have tripled in price.