China somehow got its hands on advanced Nvidia chips, despite the sanctions

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Sanctions on China may not be waterproof

Computer chip with US and China flag
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China has reportedly managed to successfully dodge Nvidia chip sanctions by purchasing server products produced by Super Micro Computer, Dell, and Taiwan's Gigabyte through resellers.

A report from Reuters claims these servers then made their way to a number of Chinese universities and scientific research centers.

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Chips not for resale

The universities and research centers apparently circumvented the rules by buying the server products through 11 Chinese reseller companies, which Reuters reports could have used stockpiles that were accrued before the sanctions came into effect.

In response to questions posed by Reuters, Nvidia said that any servers that were built with it’s chips inside must be purchased and sold by third-parties in accordance with US restrictions, stating that “If we determine that any product was subsequently resold in violation of U.S. export control rules, we'll work with our customers to take appropriate action.” Super Micro echoed this response, adding that the company complies with US sale restrictions.

Dell also told Reuters that “Our distributors and resellers are required to comply with all applicable global regulations and export controls. If we become aware of a distributor or reseller that is not complying with these obligations, we take appropriate actions, including termination of our relationship.”

One factor that could account for China’s acquisition of the banned chips is the difficulty of maintaining supply chain visibility from one vendor to another, said Daniel Gerkin, who is a Washington-based partner at law firm Kirkland & Ellis.

While the documents Reuters was able to review were only a small portion of the transactions Chinese companies are making, the chips acquired by China could be used for military purposes, particularly if China uses more clandestine means to acquire the latest chips.

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Benedict Collins
Benedict Collins
Senior Writer, Security

Benedict is a Senior Security Writer at TechRadar Pro, where he has specialized in covering the intersection of geopolitics, cyber-warfare, and business security.

Benedict provides detailed analysis on state-sponsored threat actors, APT groups, and the protection of critical national infrastructure, with his reporting bridging the gap between technical threat intelligence and B2B security strategy.

Benedict holds an MA (Distinction) in Security, Intelligence, and Diplomacy from the University of Buckingham Centre for Security and Intelligence Studies (BUCSIS), with his specialization providing him with a robust academic framework for deconstructing complex international conflicts and intelligence operations, and the ability to translate intricate security data into actionable insights.