China Telecom Found to Host 32 Banned Nvidia B300 Chips

The ongoing tension between U.S. export controls and the global demand for high-performance AI hardware has produced another notable leak in the system. An Israeli cybersecurity firm, Lava, reports that it has identified 32 Nvidia Blackwell Ultra B300 graphics processing units operating within the infrastructure of China Telecom, a state-owned telecommunications provider.

The discovery raises immediate questions regarding the effectiveness of current trade restrictions, as these specific chips have been barred from export to China by U.S. regulations. Under the current framework, such advanced hardware is intended for whitelisted buyers who commit to preventing sales to sanctioned parties. The presence of these units in a major Chinese state network suggests that the intended containment strategy may be facing significant execution challenges.

This incident follows a broader trend of controlled chips finding their way into Chinese data centers despite official bans. In 2025, reports indicated that approximately $1 billion worth of Nvidia AI chips, primarily the B200 model, were smuggled into the country over a three-month period. At that time, distributors were already preparing to handle the newer B300-series chips as they became available, indicating a sustained pipeline for illicit hardware.

Nvidia has responded to the news with a mixture of acknowledgment and minimization. A company spokesperson stated that recent court cases show the diversion of controlled products is less than half of one percent of the total, describing it as a "drop in the bucket" compared to the massive amount of domestic compute capacity China already possesses. The spokesperson emphasized that with tens of millions of GPUs in approved countries, the company views smuggling as a non-factor that is effectively blocked by governments on both sides of the Pacific.

Lava identified the 32 chips using Nvidia’s DCGM Exporter tool, a software utility designed for monitoring server health and performance. While intended for internal data center operations, the tool can sometimes be accessed from outside the network and does not always require password authentication. It remains unclear how the B300s entered China Telecom’s racks or their exact location within the network, though Lava confirms their physical presence.

The B300, announced in March of last year, represents a significant leap in performance over the previous-generation B200, offering 50% more memory and FP4 compute capability. The chip has become a target for smugglers, evidenced by the August 2026 indictment of nine individuals in Taiwan for illegally exporting the GPUs. That case involved a Taiwanese server trading firm with whitelisted status and led to employee dismissals at Supermicro following an internal investigation.

The scarcity and high value of Nvidia’s silicon have driven up prices for older models as well, with five-year-old A100 servers tripling in cost to reach up to $82,000. This economic pressure has even led some operators to retool gaming GPUs for AI workloads, highlighting the intense competition for computational power in the current market.