The US has had sanctions over China that obstruct it from getting hands on Nvidia chips, but over the past year, a few instances have come to light that reveal that China is in possession of Nvidia products. Now, the US Department of Commerce has instructed Nvidia to investigate how its products ended up in China over the past year, according to a report by The Information, citing a source familiar with the matter.
The chipmaker has reportedly asked major distributors, including Super Micro Computer and Dell Technologies, to perform spot checks on their customers in Southeast Asia.
How Did It Happen?
Nvidia’s AI chips are integrated into server products produced by both Super Micro and Dell. The Information reported that five individuals involved in smuggling Nvidia chips revealed they have successfully avoided detection during recent inspections conducted by Super Micro.
According to the report, some customers copied the serial numbers of servers containing Nvidia chips purchased from Super Micro and attached them to other servers they had access to. In certain instances, smugglers even altered the serial numbers within the operating system of the servers. Dell stated that it requires its distributors and resellers to comply with all relevant regulations and export controls.
The company further emphasised that it takes necessary actions, including terminating relationships, if a partner fails to meet these obligations. Super Micro also confirmed that it investigates and takes action against any unauthorised exports or re-exports of its products by third parties.
The Information quoted a Nvidia spokesperson as saying, “We insist that our customers and partners strictly adhere to all export control restrictions. Any unauthorised deviation of previously-owned products, including any grey market resales, would be a burden on our business, not a benefit.”
Supermicro told Reuters, “Supermicro follows all US export control requirements on the sale and export of GPU systems to regions and parties that require licenses under the Export Administration Regulations.”
The Biden administration has intensified its crackdown on chip sales to China, expanding the ban on high-end AI chip exports to the country last year. Despite this, several Chinese universities and research institutes have managed to obtain Nvidia chips through resellers, as revealed in a Reuters review of tender documents earlier in 2024. Additionally, earlier this month, the US restricted semiconductor exports to 140 companies, including manufacturers of chip equipment.
