US asks Nvidia to probe how its chips ended up in China, Information reports

(Reuters) -The U.S. Department of Commerce has recently asked Nvidia 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 and Dell Technologies 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 and the commerce department did not immediately respond to Reuters' requests 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 and Maju Samuel)