Despite the expansion of restrictions on the export of chips to China by the United States last year, some Chinese universities and research institutions have recently obtained high-end Nvidia artificial intelligence chips through distributors.
According to a review of hundreds of bidding documents by Reuters, after the United States expanded its embargo on November 17th last year, 10 Chinese entities acquired advanced Nvidia chips embedded in server products manufactured by Super Micro Computer, Dell, and Gigabyte Technology from Taiwan.
Buyers include the Chinese Academy of Sciences, Shandong Artificial Intelligence Institute, Hubei Earthquake Administration, universities in Shandong and Southwest China, a technology investment company under the Heilongjiang Provincial Government, a state-owned aerospace research center, and a space science center.
Neither Chinese buyers nor retailers responded to Reuters’ requests for comment.
According to bidding documents from November 20th to February 28th, these servers contain some of Nvidia’s most advanced chips. While the U.S. prohibits Nvidia and its partners from selling advanced chips to China (including through third parties), the sale and purchase of these chips in China is not illegal.
The 11 sellers who sold these chips are unknown Chinese retailers. Reuters could not confirm whether these retailers used inventory obtained before the tightening of chip export restrictions in the U.S. in November last year to fulfill these orders.
Nvidia told Reuters that the products mentioned in these bidding documents had already been exported and widely supplied globally before the implementation of the U.S. restriction measures. A spokesperson said, “They do not represent any violation of export control rules by any of our partners, and this is only a small part of the products sold globally.”
Server manufacturers stated that they are complying with relevant laws and may conduct further investigations.
Daniel Gerkin, a partner at the law firm Kirkland & Ellis in Washington, D.C., mentioned that due to a lack of understanding of the downstream supply chain, Nvidia chips may be transferred to China without the manufacturer’s knowledge.
He mentioned that if manufacturers have conducted thorough due diligence, “it would probably be hard for the U.S. government to take enforcement action.”
The U.S. Department of Commerce stated to Reuters that it cannot comment on any ongoing investigations, but indicated that its Bureau of Industry and Security is monitoring the movement of restricted chips, conducting end-use checks, and examining potential violations.
A Commerce Department spokesperson mentioned that they will investigate credible allegations of violations, including behaviors involving shell companies.
A spokesperson for Nvidia stated that if it is confirmed that the resale of any products violates U.S. export control rules, the company will take appropriate action in cooperation with its customers.
Super Micro Computer stated that the company complies with U.S. export regulations. “If we find third parties exporting or re-exporting without the required licenses, we will investigate and take appropriate action,” Super Micro said.
The U.S. law firm Clare Locke, representing Super Micro, mentioned in a letter to Reuters that their client goes beyond U.S. export restrictions and takes proactive measures to ensure their customers do not violate the embargo.
Super Micro mentioned that the identified Super Micro servers in the bidding documents belong to older generation or general-purpose models and lack the capability for large-scale artificial intelligence operations. These were already in China before the implementation of U.S. export control regulations. The company also stated that the winning suppliers are “not prominent customers of Super Micro.”
A spokesperson for Dell stated that the company has not found any evidence of shipping products containing the restricted chips mentioned by Reuters to the entities listed in the documents but will continue to investigate.
“Our distributors and resellers must comply with all applicable global regulations and export controls. If we find distributors or resellers not complying with these obligations, we will take appropriate measures, including terminating our business relationship,” the spokesperson said.
Gigabyte Technology stated in an email that the company complies with Taiwanese laws and international regulations. The company did not respond to questions regarding the bidding. Taiwan’s Ministry of Economic Affairs mentioned that they hope Taiwanese companies respect U.S. export controls.
As the Chinese Communist Party poses an increasing challenge to Taiwan and the Indo-Pacific region, the U.S. and allied countries are actively restricting the CCP’s access to advanced chips to prevent it from strengthening its military capabilities.
U.S. Secretary of Commerce Gina Raimondo stated on March 11th, “We will not allow China (CCP) to use our advanced technology for military advancement. So, yes, we will protect our people at all costs, including expanding our (technology export) controls.”
She mentioned that the U.S. is continually assessing the need to expand export controls to prevent the CCP from obtaining advanced computer chips and manufacturing equipment.
When asked if she is tough enough on such matters, Raimondo emphasized, “I demand that companies and everyone take responsibility.”
She stated on the “60 Minutes” program, “When I tell them they can’t sell semiconductors to China, they don’t like it, but I did it (imposed sanctions).”