Nvidia has established a customer “whitelist,” allowing only enterprises that pass stricter scrutiny to access its products, resulting in reducing the number of Asian customers by more than half. This move aims to prevent buyers from importing its advanced artificial intelligence (AI) chips into China.
According to a report from the Financial Times citing three sources, in recent months, Nvidia has intensified due diligence efforts in Singapore, Malaysia, and Japan to close export control loopholes.
The new round of review has excluded over half of Nvidia’s previous customers, but companies that did not pass the initial review can adjust and reapply.
These measures have impacted some “neocloud” service providers – cloud platforms specifically tailored for AI workloads.
Despite the United States’ ongoing export control on advanced chips, a significant number of Nvidia’s advanced chips still flow into China through third countries. Under pressure from Washington, Nvidia has tightened compliance processes.
Nvidia employees will conduct on-site visits to customers’ data centers, verify contracts, and interview end-users to confirm the authenticity of these enterprises. The U.S. Department of Commerce is also involved, providing oversight and political support.
On May 31, the U.S. Department of Commerce introduced new regulations, expanding the licensing system for the sale of advanced chips to Chinese subsidiaries, including entities of these Chinese companies outside of China.
Sales of Nvidia’s top-tier processors like “Blackwell” and “Rubin,” and AMD’s MI350x chip, among other products, require a license.
It is reported that over the past year, an estimated “hundreds of thousands” of such high-end chips and processors have entered China through subsidiaries of Chinese companies in Malaysia and Thailand.
In March this year, the U.S. prosecutors charged a co-founder of Supermicro and several employees with assisting in smuggling chips worth $2.5 billion to China. The prosecution alleged that the defendants used a Southeast Asian company as a “transit entity” to transport Nvidia chips from Taiwan to mainland China through third-party brokers.
As technology companies expand the application of AI intelligence, domestic supply in China still cannot meet the continually growing demand. Beijing is betting on the rapid expansion of Chinese chip manufacturers’ production capacity to fill this gap.
The Financial Times previously reported that the total output of domestic AI processors in China is expected to triple by the end of this year. However, the current output still lags far behind global competitors and is limited by the inability to access the most advanced manufacturing equipment.
“All domestic suppliers’ inventories have been sold out. Even those low-end chips that no one wanted before, as long as they can still be somewhat useful, are now all sold out,” said a high-ranking executive at a Chinese technology company.
In response to the new round of review measures, a spokesperson for Nvidia stated that the company “always treats compliance as the highest priority, and we fully comply with all legal requirements.”