Nvidia AI-chip smuggling expands after Jensen Huang resigns

By Priya Raman

Four Chinese universities reportedly acquired 14 Nvidia AI processors between April and last month, including two H200 graphics processing units (GPUs) that one military-linked buyer lacked authorization to receive.

Reuters reported that the Northwestern Polytechnical University (NPU) in Xi’an bought the H200 pair through a little-known supplier whose contact details Reuters could not find. The indirect route leaves the reseller’s identity and compliance checks unverified.

The report follows Nvidia chief Jensen Huang’s resignation and frames the purchases as part of a broader Chinese campaign to obtain restricted hardware.

The Federal Bureau of Investigation (FBI) is investigating an alleged Chinese operation involving Alice Huang. Congress has also intervened, seeking evidence on whether China used her to influence Huang and, through him, the U.S. government.

What changed under Trump’s case-by-case approvals?

Donald Trump approved case-by-case H200 sales to China in January after pressure from Huang, whom the report identifies as Nvidia’s former chief. Huang had argued that allowing sales was “better for keeping China dependent on U.S. technology and securing Washington’s lead in the AI race” than continuing Joe Biden’s complete export ban.

The Trump administration now collects a 25% export fee on H200 sales to China. The H200 is not Nvidia’s newest accelerator, but remains capable of large-scale AI training.

The policy did not make NPU eligible. Its military research barred it from receiving H200s even under the relaxed rules.

Which military-linked institutions obtained the chips?

NPU has sat on Washington’s sanctions list since 2001. It researches rockets, satellites and military aircraft, with programs in air, space and marine technology.

It is one of the “Seven Sons of National Defense,” officially civilian universities that devote much of their budgets to military research and serve as major recruiting sources for China’s weapons groups.

The reported acquisitions include:

• NPU, last month: Two H200 GPUs, ordered through a little-known supplier rather than purchased directly.
• Shenzhen University, September: Three H100 processors.
• Wuhan University of Technology, June: One server containing an H100 processor, plus four A100 chips.
• University of Aeronautics and Astronautics Beijing, April: Four A800 processors.

Beihang, another Seven Son, has close military ties and researches fighter aircraft.

Reuters could not identify NPU’s supplier, leaving the diversion chain undocumented. The report does not state whether every reseller knew the processors’ end users.

How can China use restricted computing without importing it?

Chinese AI companies have reportedly increased efforts to rent Nvidia computing capacity (processor access and supporting infrastructure) outside China. Their motive is precautionary because tighter export controls could follow the scandal.

One large Chinese cloud provider tested how it could secure offshore chip capacity. Other companies asked data centers outside the People’s Republic of China (PRC) to reserve performance in advance, Reuters reported.

China’s military may have found another route to modern AI computing without importing processors. This resembles leasing a vehicle abroad rather than importing one, because the Nvidia hardware never crosses the border.

Reuters did not identify the provider, data centers or contracts. Those details remain unavailable, so the military connection remains a possibility rather than a documented arrangement.

What does the Huang inquiry establish?

Alice Huang reportedly stood at the center of a broad corporate network through which Nvidia chips moved into China. The FBI is investigating, and Congress has summoned the former Nvidia chief for testimony.

Democrats and Republicans are calling for stricter export rules after the espionage case became public. Huang agreed to answer lawmakers behind closed doors about the affair and his relationship with the alleged Chinese agent.

The account supplies no public findings, documentary proof of political influence or investigators’ explanation of the procurement network. Until evidence emerges, the agent’s role, corporate network and university purchases cannot be treated as one proven supply chain.

Can Washington close the routes?

Washington has tried to block front companies (firms used to obscure end users) and purchases from unsanctioned suppliers. The report says those efforts have so far failed.

Procurement now spans three routes: smuggling through front companies, unapproved supplier sales and offshore access to Nvidia compute. The policy test is whether case-by-case approvals and the 25% fee can coexist with tighter controls without pushing more demand offshore.

Under current conditions, the report’s conclusion is restrained: discreet flows of Nvidia AI chips into China will remain difficult for the U.S. government to prevent.