Nvidia tightens tracking of AI chips in Southeast Asia to curb smuggling into China

Nvidia is stepping up how it tracks artificial intelligence chips sold in Southeast Asia to stop smugglers moving banned hardware into China, according to an exclusive Bloomberg report on November 6. The chipmaker now requires buyers in the region who want to become official Nvidia Cloud Partners to sign up for its Fleet Intelligence tracking system, which logs the physical location of AI chips inside data centres. (Photo: Nvidia H100 chips. Image: Bloomberg.)

Partner status traded for priority access

The Nvidia Cloud Partner label gives cloud computing companies priority access to Nvidia's most sought-after chips and a public stamp of approval. Nvidia is using that perk to push more buyers into joining the voluntary tracking program. Bloomberg noted the system was launched nearly a year ago as both a data centre management tool and a way to check chip locations. Nvidia declined to say whether the new requirement would extend beyond Southeast Asia or apply to existing partners.

Washington says smuggling rings moved billions in chips

US rules bar Chinese companies from buying top Nvidia AI chips without a special licence. Even so, American officials believe Chinese firms have bought billions of dollars worth of banned Nvidia processors through smuggling rings operating across Southeast Asia. In March, authorities arrested Super Micro Computer co-founder Wally Liaw on charges of plotting to smuggle $2.5 billion worth of Nvidia GPU servers into China. In August, Bloomberg reported US authorities were investigating Singapore-based Apex Logistics over suspected involvement in moving Nvidia-powered systems to China.

Controls tightened on several fronts

Bloomberg said Nvidia has removed half of the Asian companies it had previously pre-approved for chip purchases, and has told buyers not to rent more than half of their Nvidia computing capacity to Chinese companies. On October 15, Malaysian customs seized 30 server units containing advanced AI chips at Kuala Lumpur International Airport, a shipment valued at about 49.5 million ringgit ($12.1 million). Nvidia chief executive Jensen Huang has said the company studied Megaspeed International's deployments and counted every processor; that company is under investigation in the United States and Singapore.