Nvidia has reportedly tightened vetting of purchasing firms in Asia and cut more than half of its transaction-eligible customers to block the backdoor export of advanced artificial intelligence (AI) chips to China.
On the 13th, the Financial Times (FT) reported, citing multiple sources, that Nvidia introduced a "whitelist" that includes only firms that passed compliance checks.
In recent months, Nvidia strengthened due diligence on customers in Singapore, Malaysia and Japan. In the process, more than half of existing customers were reportedly removed from the pool of eligible buyers. Firms that failed the review can reapply after meeting the requirements.
Many of the firms that were cut are said to be "neocloud" operators that provide cloud services specialized for AI computing. Neocloud operators secure large volumes of graphics processing units (GPUs) to help corporations carry out AI training and inference without separate infrastructure.
Nvidia is verifying actual business operations and chip end use by visiting customer data centers to confirm contract terms and interviewing end users. The U.S. Department of Commerce is also reportedly involved in managing and overseeing the whitelist.
The move aims to stop Nvidia chips from entering China via third countries, bypassing U.S. export controls on advanced chips to China. FT said that as the U.S. government tightens its crackdown on the black market for AI Semiconductor and intermediaries, Nvidia has adopted stricter compliance procedures than before.
In March, U.S. prosecutors indicted the co-founder of server maker Supermicro and several employees on charges of smuggling $2.5 billion worth of Nvidia chips to China. Prosecutors believe they used Southeast Asian firms and a third-party broker to ship the chips from Taiwan to China.
The United States bans exports to China of Nvidia's latest advanced AI Semiconductor. U.S. President Donald Trump in Dec. last year allowed limited sales to China of the H200, at least two generations older than the latest products, but the Chinese government is also restricting purchases, citing the nurturing of its domestic chip industry.
Some Chinese technology corporations are requesting that H200 sales be allowed to meet surging computing demand for AI agents. However, Chinese authorities have not granted approval, and FT said large-scale sales are also unlikely. Nvidia said it "prioritizes compliance above all else and strictly adheres to all legal requirements."