State-Owned Chinese Telecom Caught with Banned Nvidia Chips

Israeli security firm Lava has identified thirty-two Nvidia Blackwell Ultra B300 graphics processing units inside the network of China Telecom. The state-owned telecommunications provider operates throughout China, making the presence of these specific chips notable. These processors are currently subject to strict U.S. export controls that prohibit their sale to the region. The discovery raises significant questions about how high-performance hardware bypassed regulatory checks to enter a major Chinese data center environment.

The B300 series is designed for advanced artificial intelligence workloads and offers substantial improvements over its predecessor. Nvidia announced the chip in March of last year, highlighting its increased memory and compute capabilities. The hardware was marketed as being built for the age of reasoning, with specific references to sophisticated large language models. Originally expected to ship by the end of 2025, the B300 quickly became a highly sought-after asset in the global tech market. Its performance gains make it a critical component for modern AI infrastructure.

Export restrictions have historically struggled to stop the flow of these chips. In 2025, reports indicated that Chinese companies smuggled one billion dollars worth of Nvidia AI chips into the country over a three-month period. At that time, the B200 chips were the primary target, but distributors were already preparing for the B300 release. Lava located the new chips using Nvidia’s own DCGM Exporter tool. This software is used by operators to monitor server health and performance. While intended for internal use, the tool can sometimes be accessed from outside the data center network and does not always require password authentication.

Nvidia has downplayed the severity of the finding while acknowledging the presence of the hardware. A spokesperson described the diversion of controlled products as a drop in the bucket compared to the vast amount of domestic compute power China already possesses. The company noted that tens of millions of GPUs are in service in approved countries. Nvidia insists that smuggling remains a non-factor because governments on both sides of the globe continue to enforce blocks on these transfers.

The exact method used to move the B300 units into China Telecom’s racks remains unknown. Lava has not yet confirmed the precise location within the network where the chips are situated. The issue of chip smuggling has intensified recently. In August 2026, nine individuals were indicted in Taiwan for illegally exporting B300 GPUs to China. This action followed an investigation that led Supermicro to fire several employees. The complex scheme involved a Taiwanese server trading firm with whitelisted status for GPU purchases.

Demand for Nvidia hardware continues to drive prices upward across the market. Older A100 servers, which are five years old, have seen their prices triple and can now cost up to eighty-two thousand dollars. The high value of these chips has led some organizations to retool gaming graphics cards for AI workloads where possible. Nvidia is working on a new tool to help locate its chips, but it has not been released yet. The ongoing tension highlights the difficulty of controlling the flow of critical technology in a competitive global landscape.