China Telecom Found Holding 32 Banned Nvidia B300 Chips

Israeli cybersecurity firm Lava has identified 32 Nvidia Blackwell Ultra B300 graphics processing units operating within the infrastructure of China Telecom. The state-owned telecommunications provider is a major player in the domestic Chinese market, making the presence of these specific chips a notable development. These B300 units are currently barred from export to the region under United States trade regulations, which restricts sales to approved buyers who agree not to resell to sanctioned entities.

The discovery highlights the ongoing difficulty in enforcing export controls on high-performance artificial intelligence hardware. The B300 series is a top-tier data center chip, offering significant performance advantages over its predecessor. Specifically, the new hardware provides 50% more memory and double the FP4 compute capacity compared to the B200 model. Nvidia originally positioned the chip as a solution for advanced reasoning tasks, citing specific large language models that require such power.

Lava detected the hardware using Nvidia’s own DCGM Exporter tool, a software utility designed for data center operators to monitor server health and performance. Although intended for internal use, the tool can sometimes be accessed from outside the local network and does not always require password authentication. This vulnerability allowed the security firm to pinpoint the location of the controlled chips, even though the exact physical placement within the network remains unconfirmed.

Despite the findings, Nvidia has downplayed the significance of the event. A company spokesperson stated that recent court cases show that the diversion of controlled U.S. products is less than half of one percent of the total volume. The spokesperson described this as a "drop in the bucket" compared to the vast amount of domestic computing power already available in China, arguing that with tens of millions of GPUs in service in approved countries, smuggling remains a non-factor.

The presence of these chips follows a series of legal actions related to illegal exports. In August 2026, nine individuals in Taiwan were indicted for the illegal export of B300 GPUs to China. This came shortly after Supermicro fired several employees following an internal investigation into smuggling activities. The illicit trade often involves whitelisted firms, such as a Taiwanese server trading company named Flying Tiget Tech, which facilitates the movement of hardware.

Market dynamics continue to drive the demand for these restricted components. The scarcity of new AI hardware has caused prices for older Nvidia models to surge. A100 servers, which are five years old, have seen their prices triple and can now cost up to $82,000. This economic pressure has led some organizations to retool gaming GPUs for AI workloads as a stopgap solution while the crackdown on smuggling continues.

The situation underscores the high stakes involved in the global AI chip market. As Chinese firms seek to maintain competitive advantages in artificial intelligence development, the flow of restricted hardware remains a critical point of contention between U.S. export policies and global data center needs. Nvidia continues to insist that the volume of smuggled chips does not significantly impact the broader market or the company's overall strategy.