Security Probe Spots Banned Chips In China Telecom

Lava, a security firm based in Israel, says it has located 32 Nvidia Blackwell Ultra B300 processors running inside the network of China Telecom, a major state-owned telecommunications provider. The discovery, reported by The Information, highlights the ongoing challenge of preventing restricted American technology from reaching Chinese data centers. The B300 chips are subject to U.S. export controls that prohibit their sale to Chinese entities or other sanctioned parties.

The presence of these processors within a state-owned Chinese infrastructure provider raises questions about supply chain enforcement. Nvidia declined to deny the report but downplayed its importance. In a statement, a company spokesperson argued that such diversions are statistically negligible when compared to the total volume of hardware Nvidia sells globally. "Governments, researchers, and media have all found insignificant diversion of controlled US products, less than one half of one percent in recent court cases, a drop in the bucket compared to the ocean of domestic compute China already has," the spokesperson said. "With tens of millions of GPUs in service in approved countries, this report again demonstrates that smuggling is a nonfactor, blocked by governments on both sides of the globe."

Lava did not specify how these chips entered China Telecom's server racks, nor can the firm pinpoint the exact location within the company's network. However, the identification was made using Nvidia's own DCGM Exporter software. This tool is designed for data center operators to monitor server health and performance, but it is sometimes accessible from outside the data center's network. Lava exploited this access, noting that the software does not always require password authentication.

The B300 chip was announced in March of last year and is among the most powerful data center GPUs available. It offers significant performance improvements over the previous generation B200, featuring 50 percent more memory and FP4 compute capabilities. Nvidia marketed the hardware for the age of reasoning and advanced AI models. The chip began shipping by the end of last year and quickly became a target for unauthorized export. In August 2026, authorities indicted nine individuals in Taiwan for illegally exporting B300 GPUs to China.

The illicit trade in Nvidia silicon extends beyond recent indictments. In 2025, reports indicated that Chinese companies smuggled one billion dollars' worth of Nvidia AI chips into the country within a three-month period. While B200 chips were the primary target at that time, distributors were preparing to sell B300-series chips as they became available. This demand persists despite the crackdown on smuggling activities.

The market for Nvidia's hardware remains highly competitive due to the critical role these chips play in AI data centers. Demand for older silicon has also driven prices upward. Nvidia's A100 servers, which are five years old, have tripled in price and can cost up to $82,000. The enforcement actions have led some to retool gaming GPUs for AI workloads in an attempt to bypass restrictions.