Banned Nvidia chips diverted to China

Taiwan is adding AI servers and advanced semiconductors to its controlled exports list, making unauthorized shipments to China a criminal offense under the Foreign Trade Act. Taiwan's Minister of Economic Affairs Kung Ming-hsin announced the change to Bloomberg, describing it as part of a broader Trump administration effort to clamp down on chip smuggling. The move closes a legislative gap that the Taiwan prosecution cases exposed: AI server export was previously not a standalone criminal offense, leaving prosecutors to rely on breach of trust and forgery charges. A CNAS report estimated approximately 140,000 AI chips were smuggled to China in 2024 alone, representing between one and thirty percent of China's inference computing capacity at the time.

On the enforcement side, Nvidia has instructed cloud and data center customers to ensure at least 51% of services go to non-Chinese companies under new contracts, and to report end-user identities. The rule targets overseas cloud rental, a path Chinese AI developers use to access advanced Nvidia hardware without importing it, since US export controls do not generally cover remote access. A B300 rack priced at roughly $600,000 internationally sold for approximately $2.54 million in China last month.

Taiwan's Keelung District Prosecutors indicted nine people on August 24, 2026, including a partner manager at Nvidia's Taiwan office, two sales managers at Supermicro's Taiwan branch, and Albatron Technology's CEO. Of 130 servers in the alleged scheme, 74 reached Chinese buyers through staged audits and transshipment routes, and 56 were seized at the border. The indictment describes a five-point supply chain scheme that defeated Supermicro's compliance controls from the inside. Supermicro restricts B300 sales to whitelisted buyers who must sign end-user agreements prohibiting re-export to sanctioned parties, and orders of eight or more units trigger mandatory on-site inspections by Nvidia and Supermicro representatives.

The US prosecution, unsealed in late March 2026, charged Supermicro Taiwan general manager Ruei-Tsang Chang, a person named Liaw, and contractor Ting-Wei Sun for conspiring to divert roughly $2.5 billion in Supermicro servers containing Nvidia Blackwell-class chips to Chinese buyers via a Southeast Asian pass-through company. Supermicro confirmed on April 7, 2026, that an independent investigation was underway. One contractor has since pleaded guilty to four counts.