A man walks past the Nvidia logo at the company’s AI Summit in Mumbai, India, October 24, 2024. REUTERS
(Reuters) – The U.S. Department of Commerce has recently asked Nvidia (NVDA.O), to look into how the company’s products ended up in China over the past year, The Information reported on Thursday, citing a person close to the department.
The chip giant has asked big distributors such as Super Micro Computer (SMCI.O), and Dell Technologies (DELL.N), to conduct spot checks of their customers in Southeast Asia, the report said. Nvidia’s artificial intelligence chips are embedded in server products made by Super Micro and Dell.
The Information reported that five different people involved in smuggling Nvidia chips said they have managed so far to evade detection during recent inspections by Super Micro.
“We insist that our customers and partners strictly adhere to all export control restrictions. Any unauthorized deviation of previously-owned products, including any grey market resales, would be a burden on our business, not a benefit,” an Nvidia spokesperson said in an emailed response.
Some of the customers duplicated serial numbers of the servers containing Nvidia chips that they purchased from Super Micro and attached them to other servers that they had access to, the report said, citing a person close to Super Micro.
In some cases, smugglers even altered the serial numbers in the operating system for the servers, the report said.
Dell said the company requires its distributors and resellers to follow all applicable regulations and export controls.
The company added that it takes appropriate action “up to and including termination” of its relationship if a partner is not adhering to these obligations.
Super Micro said it investigates and takes action against any unauthorized exports or re-exports of its products by third parties.
“Supermicro follows all U.S. export control requirements on the sale and export of GPU systems to regions and parties that require licenses under the Export Administration Regulations,” the company told Reuters.
The commerce department did not respond to a Reuters request for comment.
The Joe Biden administration has doubled down on its chip crackdown in China. The U.S. broadened a ban on the sale of high-end AI chips to the country last year.
Still, several Chinese universities and research institutes procured these Nvidia chips via resellers, a Reuters review of tender documents showed earlier in 2024.
Earlier this month, the U.S. curbed semiconductor exports to 140 companies, including chip equipment makers.
Reporting by Deborah Sophia and additional reporting by Jaspreet Singh in Bengaluru; Editing by Shilpi Majumdar, Maju Samuel and Sherry Jacob-Phillips
