Nvidia Pressed on Red Flags as China Chip Smuggling Cases Mount

A surveillance photo released by US prosecutors shows someone in a Southeast Asian warehouse holding a hair dryer, peeling serial stickers off computer server packages. That image, together with a seized Singapore mega-mansion and intercepted cargo in Taiwan, anchors Bloomberg's October 1 feature on an expanding global crackdown that has revealed a vast network rerouting restricted Nvidia silicon into China in violation of US national security rules. Officials are asking why Nvidia missed red flags.

Nvidia's answer is that it has tightened the screws. The company removed more than half of its previously authorized Asian AI-chip buyers after creating a tougher whitelist, Bloomberg reports, with intensified due diligence in Singapore, Malaysia and Japan. "Smuggling is a nonstarter," the company told Bloomberg, adding that it "primarily sell[s] our products to well-known partners, including [original equipment manufacturers], who help us ensure that all sales comply with US export control rules." Nvidia says its due diligence "has helped identify suspected attempts to circumvent US export controls, leading to federal prosecutions."

The cases keep piling up. A September C4ADS investigation documented restricted Nvidia processors moving through universities, Southeast Asian transshipment networks and opaque corporate structures. Singaporean authorities seized a luxury mansion valued at SGD 55 million tied to the trade. And this week federal prosecutors in Los Angeles charged Greg Lui, 38, the owner of Earthmade Computer Inc., with smuggling about $300 million of export-controlled Nvidia AI servers to China between 2023 and 2024, routing them first to Singapore and Malaysia. It is one of 345 China-AI stories we have logged in the past 90 days on our China AI tracker.

The gap in Nvidia's defense sits between the whitelist and the endpoint. Researchers and officials continue to find restricted parts arriving in China even as the company tells customers its vetting has stiffened.