Lava Uncovers 32 Banned Nvidia B300 Chips in China Telecom's Servers
An Israeli security firm detected prohibited Blackwell Ultra GPUs in a major Chinese state network, prompting Nvidia to dismiss the breach as statistically insignificant.
By Allison Rojas ·
U.S. export controls have long been the primary gatekeeper for advanced semiconductor technology, but a new security audit suggests the barrier is not impenetrable. Israeli cybersecurity firm Lava announced on Thursday that it has identified 32 Nvidia Blackwell Ultra B300 graphics processing units operating within the internal network of China Telecom, a state-owned telecommunications provider.
The discovery is significant because the B300 is currently barred from export to China under U.S. regulations. These high-performance chips are strictly limited to whitelisted buyers who agree not to resell them to sanctioned entities. The presence of these specific units in a Chinese data center raises immediate questions about how the hardware bypassed such stringent trade restrictions.
This incident is not an isolated event but part of a broader pattern of supply chain leakage. In 2025, reports indicated that Chinese entities smuggled approximately $1 billion worth of Nvidia AI chips into the country over a three-month period. While the B200 was the primary target at that time, distributors were already preparing for the arrival of the B300 series, indicating a sustained demand for the latest silicon despite the regulatory hurdles.
Nvidia has responded to the findings with a mix of acknowledgment and minimization. While the company did not deny the presence of the chips, a spokesperson characterized the volume of diverted hardware as negligible. "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 stated. The company emphasized that with tens of millions of GPUs already in service in approved countries, such smuggling incidents remain a non-factor in the broader market.
The method used to locate the chips highlights a potential vulnerability in data center monitoring tools. Lava identified the B300 units using Nvidia’s DCGM Exporter, a software utility designed for data center operators to monitor server health and performance. Although intended for internal use, this tool can sometimes be accessed from outside the data center network and, in some configurations, does not require password authentication. Nvidia has confirmed it is developing a dedicated tool to help locate its chips, but that solution has not yet been released.
The B300 remains highly coveted due to its substantial performance advantages. Announced in March 2025, the chip offers 50% more memory and FP4 compute capability than its predecessor, the B200. Nvidia marketed the B300 as "built for the age of reasoning," specifically citing its suitability for sophisticated large language models like DeepSeek R1. The chip was originally scheduled to ship by the end of 2025, quickly becoming a high-value target for smugglers.
Recent legal actions underscore the complexity of the smuggling networks. In August 2026, nine individuals were indicted in Taiwan for the illegal export of B300 GPUs. This followed an investigation by Supermicro, which fired several employees after discovering internal smuggling activities. The scheme reportedly involved Flying Tiget Tech, a Taiwanese server trading firm that held whitelisted status for GPU purchases, illustrating how legitimate channels can be exploited.
The scarcity of these advanced chips has also distorted the secondary market for older hardware. Demand for Nvidia’s A100 servers, which are five years old, has tripled in price, with units now fetching up to $82,000. Some operators have even resorted to retooling gaming GPUs to run AI workloads, a testament to the intense competition for compute power. As the investigation into China Telecom’s network continues, the B300 discovery serves as a reminder that global chip controls remain a dynamic and challenging landscape.
The next steps involve determining exactly where within China Telecom’s infrastructure the chips are located and how they were installed. While Lava confirmed the presence of the hardware, the precise server racks remain unknown. For now, the incident adds another layer to the ongoing geopolitical and commercial battle over control of the world’s most powerful AI computing resources.
