China obtains banned Nvidia AI chips through resellers

Chinese universities and research institutes have acquired high-end Nvidia artificial intelligence (AI) chips despite a recent US ban on such sales, according to Reuters.

A Reuters review of procurement documents revealed on Tuesday that ten Chinese entities obtained advanced Nvidia chips embedded in servers from Super Micro, Dell, and Gigabyte between November 2023 and February 2024.

This period coincides with the US expanding its export restrictions on chip technology to China.

The specific chips involved are among Nvidia’s most powerful, raising concerns about potential violations of the export ban.

While the US restricts Nvidia and its partners from directly selling these chips to China, the final sale within China itself is not illegal.

The sellers in this instance were unidentified Chinese retailers. It is unclear whether they used pre-existing stock acquired before the tightened regulations or obtained them through other means.

Nvidia claims the documented purchases involve readily-available products exported before the restrictions. They maintain these sales represent a negligible portion of their global business and do not indicate any partner violations.

Server manufacturers involved, including Super Micro and Dell, have stated compliance with applicable laws. However, Dell has opened an investigation into the matter.

The Chinese buyers included prominent institutions like the Chinese Academy of Sciences and several universities. None of these entities responded to inquiries from Reuters.

Experts suggest the chips could have been diverted to China without the manufacturers’ knowledge due to limited visibility within supply chains.

However, sufficient due diligence by the manufacturers could potentially shield them from legal action by the US government.

The US Commerce Department declined to comment on potential investigations but emphasised their monitoring of restricted chip diversions and conducting end-use checks to identify potential breaches.

This incident highlights the challenges of enforcing export restrictions in a complex global supply chain. Further investigation is needed to determine if any violations occurred and what actions might be taken.