Nvidia cuts approved Asia buyer list in half, sends inspectors to data centers in China crackdown Nvidia has slashed its authorized Asia customer list by more than half, introducing a "white list" of companies that passed new compliance checks designed to stop its AI chips from reaching China, the Financial Times reported Monday. The tougher vetting comes after Washington pressured the chipmaker to shut down a distribution network that prosecutors say smuggled billions of dollars of hardware through third countries.
Over the past few months, Nvidia stepped up due diligence in Singapore, Malaysia, and Japan, the three jurisdictions that have featured most often in chip-diversion cases. More than half of its previous Asian customers, particularly neo-cloud providers, failed the initial review and were removed from the list, according to people familiar with the matter.
Those cut off can reapply after making changes. The company is not just running background checks.
Nvidia staff now visit customer data centers, verify contracts, and interview end users before approving sales, the report said. The US Commerce Department is also providing oversight and political backing.
The crackdown follows a string of enforcement actions that exposed how porous Nvidia's Asian distribution had become. In March, US prosecutors charged Supermicro co-founder Yih-Shyan "Wally" Liaw and two employees with allegedly smuggling $2.5 billion worth of Nvidia chips into China through a Southeast Asian proxy company.
Singapore seized a $42 million mansion tied to alleged GPU smugglers. Taiwan raided Supermicro offices and two supply-chain partners.
The smuggling persisted because the economics are brutal. Restricted Nvidia B300 servers reportedly sell for around $1 million inside China, close to double the US list price, a margin that funds creative logistics.
"We insist our partners are compliant," Nvidia CEO Jensen Huang told media in May, as Taiwan launched its operations against chip smuggling. "We hope that they will enhance and improve their regulation compliance and prevent that from happening in the future."
The white list is the commercial expression of a broader regulatory shift. In May, the Commerce Department's Bureau of Industry and Security issued guidance requiring export licenses for advanced chips going to any entity whose ultimate parent is headquartered in China or Macau, regardless of where that entity operates. A Singapore address no longer settles anything.
The cost to Nvidia's China business is staggering. Its AI GPU market share in the country is projected to collapse from 66% in 2024 to roughly 8% by 2026, as domestic players like Huawei ramp up production.
Chinese firms are projected to capture an estimated 80% of the domestic AI chip market. Beijing has mandated that state-funded data centers use only domestic chips, effectively locking Nvidia out of a massive segment.
Washington approved roughly 10 Chinese companies for purchases of the older H200 chip in May, but zero shipments have actually been made, with regulatory hurdles on the Chinese side blocking delivery. Both governments now appear to be restricting the same trade for opposite reasons.
Nvidia shares fell around 3.5% on Monday amid a broader tech sell-off. The company did not immediately respond to requests for comment.
