Even when the United States expanded its embargo on the sale of artificial intelligence processors to China last year, Chinese research centers and universities were still able to get their hands on expensive Nvidia chips through resellers.
After the U.S. on Nov. 17 expanded the embargo to subject more chips and countries to licensing rules, ten Chinese entities obtained advanced Nvidia chips embedded in server products made by Super Micro Computer Inc., Dell Technologies Inc., and Taiwan's Gigabyte Technology Co Ltd, according to a Reuters review of hundreds of tender documents.
The servers specifically have some of Nvidia's most cutting-edge hardware, according to the previously undisclosed bids that were completed between November 20 and February 28. Although Nvidia and its partners are prohibited by US law from selling sophisticated processors to China, including through third parties, the chips themselves are permissible to buy and sell in China.
The eleven vendors of the chips were obscure Chinese merchants. It was unclear to Reuters if they used stocks obtained prior to the United States' tightening of semiconductor export limits in November in order to complete the contracts.
When contacted by Reuters, Nvidia stated that the tenders include items that were freely accessible and exported prior to the limitations."They do not indicate that any of our partners violated the export control rules and are a negligible fraction of the products sold worldwide,"a spokesman said.
The makers of the servers indicated they will look into this further or that they conformed with all applicable legislation.
The Chinese Academy of Sciences, the Shandong Artificial Intelligence Institute, the Southwest and Shandong universities, the Heilongjiang provincial government's tech investment firm, a state-run aviation research center, and a space science center were among the purchasers.
When Reuters questioned the Chinese purchasers and retail dealers about the situation, none of them replied.
Due to a lack of access into downstream supply chains, Daniel Gerkin, a partner at Kirkland & Ellis law firm located in Washington, stated that Nvidia chips may have been routed to China without the manufacturer's knowledge.
He stated that "it presumably would be challenging for the U.S. government to pursue an enforcement action" if the company had carried out adequate due diligence.
The U.S. Commerce Department informed Reuters that while its Bureau of Industry and Security tracked the diversion of prohibited chips, verified their intended purpose, and looked into possible security breaches, it was unable to comment on any possible current investigations.
According to a spokeswoman, authorities will look into any plausible claims of infractions, including those involving the establishment of shell corporations.
According to Nvidia, systems that are constructed using its graphic processing units (GPUs), which are processors that divide up computer work into smaller chunks and process them all at once, and that are then sold to other parties must abide with US regulations.
"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," a spokeswoman said.
According to Super Micro, it complies with US regulations on the export and selling of GPU systems to countries and organizations that need permits.
"If we become aware that a third party has exported or reexported without the required licenses, we investigate the matter and take appropriate action," added the statement.
U.S. law firm Clare Locke said in a letter to Reuters on behalf of Super Micro that its client "goes above and beyond what U.S. export restrictions require" by taking proactive measures to guarantee that its clients do not break the constraints.
"Older generation or general purpose servers not capable of the largest scale AI operations that were available in China prior to the export control regulations" is what Super Micro said the bids identifying its products represented. The business stated that the vendors that were awarded "are not known Supermicro customers".
Dell "found no evidence of shipping products configured with the restricted chips you listed to the entities you named," according to a representative for the business, but it said it would keep looking.
It is mandatory for our distributors and resellers to adhere to all relevant international laws and export controls. We take necessary measures, such as ending our agreement, if we learn of a distributor or reseller who is not abiding by these commitments, according to the spokeswoman.
In an email, Gigabyte said that it conformed with both international and Taiwanese legal requirements. When questioned later with tenders revealing its goods as a source of prohibited Nvidia chips, it remained silent. According to Taiwan's ministry of economics, Taiwanese businesses should abide by US export laws.