Restricted AI Chips Surface in China Telecom

Security researchers say they have identified 32 restricted Nvidia Blackwell Ultra B300 chips operating within the network of China Telecom, a state-owned telecommunications provider. The presence of these processors in a Chinese data center raises immediate questions about supply chains, as these specific chips cannot be sold to Chinese entities under current U.S. export regulations. The finding indicates that advanced hardware designated for restricted parties is nonetheless present in Chinese infrastructure.

Lava, an Israeli security firm, identified the specific hardware within China Telecom's systems. These processors are part of a category of high-performance graphics units and artificial intelligence data center hardware that is barred from export to China. Such chips can only be sold to whitelisted buyers who agree not to re-export them to sanctioned parties. While governments have worked to block this trade, reports indicate that Chinese companies successfully imported approximately one billion dollars worth of similar Nvidia artificial intelligence hardware in a three-month period during 2025.

Nvidia has addressed the report without disputing the specific findings. A spokesperson for the company stated that governments, researchers, and media have all found an insignificant diversion of controlled U.S. products, specifically citing a figure of less than one half of one percent in recent court cases. The spokesperson called such diversion a drop in the bucket compared to the ocean of domestic compute China already has, adding that with tens of millions of GPUs in service in approved countries, smuggling is a nonfactor, blocked by governments on both sides of the globe.

The method by which these specific processors entered China Telecom's server racks remains unknown. Lava also cannot confirm exactly where within the company's network the chips are located. However, the firm identified them using Nvidia's own DCGM Exporter tool. This software is designed for data center operators to monitor server health and performance. While intended for internal use, the tool can often be accessed beyond the data center's network, and it does not always require password authentication.

The Blackwell Ultra B300 is a powerful data center GPU that offers substantial performance gains, including 50 percent more memory and FP4 compute than the previous-generation B200. Nvidia previously announced it was working on a separate tool to allow its chips to be located, though that software has not yet been released. The demand for Nvidia silicon remains high, with older A100 servers tripling in price despite being five years old, reaching costs of up to $82,000. The ongoing crackdown on chip smuggling has led some to retool gaming GPUs to run AI workloads where possible.