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.
The US government banned the sale of Nvidia chips to China in 2023, but Chinese law does not state that it is illegal to buy and sell the chips inside the country.
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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