Exclusive-China acquired recently banned Nvidia chips in Super Micro and Dell servers, tenders show
By Eduardo Baptista, Fanny Potkin and Max A. Cherney
BEIJING/SINGAPORE (Reuters) – Chinese universities and research institutes recently obtained high-end Nvidia artificial intelligence chips from resellers, despite a broader U.S. ban last year on the sale of such chips. technologies to China.
A Reuters review of hundreds of bidding documents shows 10 Chinese entities have acquired advanced Nvidia chips embedded in server products made by Super Micro Computer Inc., Dell Technologies Inc. and Taiwan’s Gigabyte Technology Co Ltd after the United States extended the embargo to the following subjects on November 17. more chips and countries with licensing rules.
Specifically, the servers contained some of Nvidia’s most advanced chips, according to unreleased tenders concluded between November 20 and February 28. While the United States prohibits Nvidia and its partners from selling advanced chips to China, including through third parties, the sale and purchase of chips is not illegal in China.
The 11 chip sellers were little-known Chinese retailers. Reuters could not determine whether, to fulfill orders, they used inventory acquired before the United States tightened chip export restrictions in November.
Contacted by Reuters, Nvidia said the tenders specify products that were exported and widely available before the restrictions. “They do not indicate that any of our partners have violated export control rules and represent a negligible fraction of products sold globally,” a spokesperson said.
Server makers have said they are complying with applicable laws or will investigate further.
Buyers included the Chinese Academy of Sciences, Shandong Institute of Artificial Intelligence, Hubei Earthquake Administration, Shandong and Southwest Universities, a technology investment company owned by the Heilongjiang provincial government , a state-run aeronautical research center and space science center. .
None of the Chinese retail buyers and sellers responded to Reuters’ questions on the matter.
Daniel Gerkin, a partner at Washington-based law firm Kirkland & Ellis, said Nvidia chips could have been diverted to China without the manufacturer’s knowledge, given the lack of visibility into downstream supply chains .
If the manufacturer had done sufficient due diligence, “it would probably be difficult for the U.S. government to take enforcement action,” he said.
The U.S. Commerce Department told Reuters it could not comment on possible ongoing investigations, but said its Office of Industry and Security was monitoring diversions of restricted chips, conducting usage checks final and examined potential violations.
Authorities will investigate credible allegations of violations, including through the use of shell companies, a spokesperson said.
Nvidia said systems built with its graphics processing units (GPUs) — chips that break computing tasks into smaller pieces and process them together — and resold by third parties must comply with U.S. restrictions.
“If we determine that a product was subsequently resold in violation of U.S. export control rules, we will work with our customers to take appropriate action,” the spokesperson said.
Super Micro said it complies with US requirements for the sale and export of GPU systems to regions and parties requiring licenses.
“If we learn that a third party has exported or re-exported without the required licenses, we will investigate the matter and take appropriate action,” the statement said.
In a letter to Reuters on behalf of Super Micro, U.S. law firm Clare Locke said its client “goes beyond what U.S. export restrictions require” by proactively taking steps to ensure that its customers do not violate the restrictions.
Regarding the RFPs identifying its products, Super Micro said they were “older generation or general purpose servers, incapable of performing the larger scale AI operations available in China Before Export Control Regulations.” The selected suppliers “are not known customers of Supermicro,” the company said.
A Dell spokesperson said the company “found no evidence of shipping products configured with the restricted chips you listed to the entities you named” but would continue to investigate.
“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 who is not complying with these obligations, we take appropriate action, including the termination of our relationship,” the spokesperson said. .
Gigabyte said in an email that it complies with Taiwanese laws and international regulations. It did not respond to subsequent questions about tenders identifying its products as a source of banned Nvidia chips. Taiwan’s Ministry of Economy said it expected Taiwanese companies to comply with U.S. export controls.
BENEFITS OF RESEARCH
The deals were disclosed in a dozen tenders, which Reuters found in public databases that cover only a fraction of the purchases made by Chinese state-owned entities. But this little preview shows that China still has access to advanced chips that U.S. officials say could support AI for military applications, such as modernizing China’s defense forces or developing weapons like hypersonic missiles .
Each of the purchases was limited to several servers and several dozen prohibited chips. Still, they could be useful for training models and conducting advanced research, according to seven industry analysts and executives.
The bids – valued at between 71,500 yuan and 1.86 million yuan, or between $10,000 and $259,000 – did not specify intended uses.
Under Chinese law, purchasing agencies representing state or state-affiliated buyers must verify that a supplier can respond to the tender before it is announced as a winner and that a contract is signed.
Reuters only analyzed tenders whose winners had been announced.
Companies and individuals accused of violating U.S. export controls may be subject to civil or criminal penalties in the United States, including fines of hundreds of thousands of dollars and up to 20 years in prison for individuals.
Reuters reported last year that an underground trade in Nvidia chips had emerged in China, as evidenced by the Huaqiangbei e-market in Shenzhen in June, before the United States widened its restrictions. On a return visit in December, the sellers who had spoken to Reuters a few months earlier had left, and other sellers said they did not know why they had left.
Reuters could not establish why the sellers were no longer present in the market.
($1 = 7.1932 Chinese yuan renminbi)
(Cherney reported from San Francisco. Additional reporting by Beijing newsroom, David Kirton in Shenzhen, Josh Ye in Hong Kong, Stephen Nellis in San Francisco, Alexandra Alper and Karen Freifeld in Washington and Ben Blanchard in Taipei; editing by Brenda Goh and David Crawshaw)
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