Nvidia's China Problem: Export-Banned Blackwell Chips Trained China's Top AI Models

By Daniel Okafor

Roughly two million advanced chips entered China in 2024 and 2025 through schemes built to hide their final destination, according to Epoch AI estimates. That figure frames the week's central claim: the leading open-weight Chinese AI models carry fingerprints of training on Nvidia Blackwell GPUs — chips the US government bans from export to China.

What does the research actually show?

Will DePue, a former OpenAI researcher who now leads the nonprofit Unemployment Labs, analyzed the weights of openly released large language models from DeepSeek, Moonshot AI, MiniMax and Ant Group. Model weights retain traces of the hardware that trained them. DePue found what the report calls compelling evidence that Moonshot's Kimi K3 releases and DeepSeek's V4 models were trained partly on Blackwell chips.

Note the limits. The evidence shows Blackwell fingerprints, not a full training run on Nvidia silicon. Nor does it prove export laws were broken. The chips could have sat in offshore data centers — a route so popular with Chinese firms that it has driven what the source calls an industrial revolution in Malaysia, where Epoch data puts Nvidia AI accelerator imports at 275,000 units across 2024 and 2025.

The White House has made its own call. Technology adviser Michael Kratsios said earlier this year that Moonshot had used export-banned Nvidia chips, citing US intelligence sources.

Why did Jensen Huang leave?

Nvidia CEO Jensen Huang left the company this week after admitting an affair with Alice Huang, an executive at Megaspeed — a company implicated in smuggling Nvidia chips into China and one Alice Huang has allegedly served as an agent of Chinese intelligence. Huang's relationships with a customer and two employees drew public attention, but the sharper risk is corporate: Nvidia's potential liability for export control violations likely factored into the split.

The enforcement picture remains unproven. US investigators have not confirmed smuggling took place, nor that Jensen Huang knew of it. Nvidia and Huang have both vouched for Megaspeed's data centers, saying Nvidia officials visited them to confirm they were legitimate.

Bloomberg reported Friday that a company linked to Alice Huang was involved in smuggling banned Nvidia chips to a data center in Shanghai. Megaspeed, through its subsidiary Speedmatrix, has sat at the center of that trade for years and faces investigations by both the US and Singaporean governments.

How big is the leakage?

The numbers, side by side:

• ~2 million advanced chips entered China in 2024–2025 via destination-hiding schemes (Epoch AI estimate).
• 275,000 Nvidia AI accelerators were imported to Malaysia over the same period.
• 600,000 H200 chips are reportedly stockpiled in Hong Kong, awaiting clearance into China.

The Trump administration permits Nvidia to export the H200, a less powerful chip, provided shipments take a circuitous route that lets the US claim a 25% tariff. Blackwell remains fully banned for China and Chinese-owned firms.

Georgetown researcher Sam Bresnick, speaking to TechCrunch this summer, questioned the logic: "If we care about the U.S. tech edge, it doesn't make any sense to me that you would not allow Chinese companies to access chips in mainland China or Hong Kong and Macau, but then say, actually, if you just go over to Malaysia, you can do whatever you want."

Who else carries exposure?

In May, short-selling firm Culper published a report arguing Nvidia had a "China problem": a significant share of revenue flows from Chinese demand, through remote data centers or outright smuggling in violation of US law. Culper alleged Megaspeed's backers include Chinese firms barred from accessing US chips.

The short thesis had a twist. Culper bet against Nvidia not on a US crackdown but on Beijing's response — a renewed commitment to domestic chips. If China succeeds, billions in chip demand could vanish.

The 600,000 H200 units sitting in Hong Kong have no agreed explanation. Stanford research scholar Graham Webster said he doesn't buy the theory that withholding them would force domestic production, since demand is too large. Other theories include preparation for a trade deal involving large US imports, or concerns about surveillance technology inside the chips.

What changes for compliance?

Little, for now. US companies face limited obligations to track what customers do with controlled goods like AI chips — a gap the Malaysia route exploits. Enforcement accountability is itself in question: Commerce Secretary Howard Lutnick, who oversees export licensing, could reportedly lose his job after reports that his investigators missed suspicious buyers and grew too close to Nvidia officials.

Every promise of control in this story carries a caveat. The fingerprint evidence, the intelligence claims and the smuggling allegations all remain short of confirmed violations. What is confirmed is scale — two million chips — and the gap between where export law ends and where compute actually flows.