C4ADS Identifies Three Potential Routes for Restricted Nvidia AI Chips Reaching China

The nonprofit research group C4ADS identified at least 56 restricted Nvidia AI chips worth 11.9 million renminbi (about $1.7 million) in Chinese university and research-institution procurement records from July 2025 through January 15, 2026, according to its report "Covert Compute: How Advanced AI Chips Reach China." C4ADS also found 50 shipments of restricted Nvidia GPUs with a combined declared value of roughly $13.4 million routed through Vietnam, India and Malaysia toward Hong Kong or China, and noted that Megaspeed International imported about $4.6 billion of Nvidia hardware into Southeast Asia during the period examined, with its ultimate ownership and the legality of the transactions unresolved. C4ADS said the records show possible diversion pathways rather than completed violations in every case, since legitimate testing, repair and reexport activity can resemble illicit diversion.

C4ADS Identifies Three Potential Routes for Restricted Nvidia AI Chips Reaching China - C4ADS identified at least 56 restricted Nvidia chips worth 11.9 million renminbi, or about $1.7 million, in Chinese university and research-institution procurement records from July 2025 through January 15, 2026. <sup \ 1\ https://c4ads.org/reports/covert-compute/ </sup - The group found 50 shipments totaling about $13.4 million that moved Nvidia GPUs through Vietnam, India and Malaysia toward Hong Kong or China. The report uses inconsistent date ranges for this dataset, listing 2022–2025 in its PDF and 2023–2025 on its web summary. <sup \ 1\ https://c4ads.org/reports/covert-compute/ </sup <sup \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf </sup - Megaspeed International imported about $4.6 billion of Nvidia hardware into Southeast Asia during the period examined by C4ADS, but the group said its ultimate ownership and the legality of the transactions remain unresolved. <sup \ 1\ https://c4ads.org/reports/covert-compute/ </sup - C4ADS said its records show possible diversion pathways, not completed violations in every case; legitimate testing, repair and reexport activity can resemble illicit diversion. <sup \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf </sup Export restrictions have not stopped all Nvidia AI hardware from appearing in Chinese procurement and trade records, according to a report from the nonprofit research group C4ADS. The report identifies three potential channels: purchases by Chinese universities and research institutions, shipments routed through Southeast Asian manufacturing and logistics hubs, and corporate structures that obscure who controls large importers. \ 1\ https://c4ads.org/reports/covert-compute/ The report, titled “Covert Compute: How Advanced AI Chips Reach China,” analyzed 371,442 Chinese government documents published between July 2025 and January 15, 2026, alongside 2022–2025 trade data and corporate records. C4ADS said the results are conservative because the analysis included only records that explicitly named Nvidia products and did not capture relabeled equipment, private transactions or remote access to computing capacity. \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf 56 chips in public procurement records C4ADS found at least 56 restricted Nvidia chips in contracts involving Chinese universities and research institutions during the six-month records window. The contracts had a total value of 11.9 million renminbi, or about $1.7 million, according to the report. \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf The chips appeared inside broader, multi-vendor contracts and were supplied through companies that C4ADS said were not clearly authorized Nvidia distributors. One example involved four A100 GPUs procured by the China Academy of Information and Communications Technology, a state-owned institute under China’s Ministry of Industry and Information Technology. The report said the A100 has been restricted from export to China since October 2022. \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf Other records named A800 data-center GPUs and RTX 4090 cards in a Shanghai Maritime University procurement related to container-terminal remote control. C4ADS linked the university to the China State Shipbuilding Corporation through prior research and supply relationships, but its legal disclaimer says that naming an institution or company does not establish a violation. \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf Trade routes create ambiguity In a separate review of trade data, C4ADS identified 50 shipments of restricted Nvidia GPUs that moved through Vietnam, India and Malaysia before reaching Hong Kong or China. The shipments had a combined declared value of approximately $13.4 million and included A100, H100 or GH100, and AD102-series products. The report’s public materials differ on whether the observation period begins in 2022 or 2023. \ 1\ https://c4ads.org/reports/covert-compute/ \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf The report describes these transactions as possible diversion or transshipment rather than confirmed smuggling. Southeast Asian countries serve legitimate roles in chip assembly, testing, repair and packaging, and C4ADS acknowledged that those activities can provide lawful explanations for some movements. It also warned that trade records can contain errors or deliberately distorted product descriptions. \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf That distinction matters because a shipment to an intermediary country does not by itself show that an export-control violation occurred. C4ADS said its analysis is intended to identify high-risk networks and methods for further investigation, not to make definitive legal findings. \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf The $4.6 billion importer The largest value in the report concerns Megaspeed International Pte. Ltd., which C4ADS identified as a major Southeast Asian importer of Nvidia hardware. Drawing on trade and corporate records, the group estimated that Megaspeed imported about $4.6 billion of Nvidia equipment during the period it examined. C4ADS said the company’s ultimate beneficial ownership remains unresolved and may include links to China, but it did not characterize the full import total as confirmed illicit trade. \ 1\ https://c4ads.org/reports/covert-compute/ \ 2\ https://c4ads.org/wp-content/uploads/2026/09/Covert-Compute-C4ADS.pdf The report’s findings come as U.S. agencies continue to pursue alleged diversion schemes involving AI servers and accelerators. In an indictment unsealed March 19, the Justice Department charged three people with allegedly diverting U.S.-manufactured servers containing controlled AI technology to China. Prosecutors alleged that a Southeast Asian company bought about $2.5 billion of servers between 2024 and 2025 and that roughly $510 million of equipment was diverted to China between late April and mid-May 2025. Those allegations remain unproven in court. \ 3\ https://www.justice.gov/opa/pr/three-charged-conspiring-unlawfully-divert-cutting-edge-us-artificial-intelligence The Commerce Department’s current policy allows case-by-case review for certain Nvidia H200 and comparable AMD accelerators if specified security requirements are met. Nvidia’s most recent quarterly filing, dated July 26, 2026, said the company had made only a fraction of the allowed H200 shipments after incurring a $400 million charge related to excess inventory and purchase obligations; those shipments accounted for less than 1% of Data Center revenue in its most recent quarter. \ 4\ https://www.bis.gov/press-release/department-commerce-revises-license-review-policy-semiconductors-exported-china \ 5\ https://www.sec.gov/Archives/edgar/data/1045810/000104581026000075/nvda-20260726.htm Companies mentioned Further sources The stories that matter, in one email. Free — unsubscribe anytime.