Reports of an Elaborate Chinese GPU Smuggling Operation Are ‘Far-fetched’

If some of Nvidia’s top-shelf GPUs—the physical artifacts currently at the center of the AI craze—hypothetically fell into the wrong hands, Nvidia’s next moves would have to placate a lot of parties, from shareholders to regulators to customers to China hawks in the Senate like Tom Cotton. 

And a new report does say smuggled GPUs are now being used illegally by the Chinese company Deepseek, which, for someone like Cotton, would be like the One Ring being smuggled directly to Sauron. But for what it’s worth, Nvidia calls the details of the report “far-fetched.” 

According to one of the tech news site The Information’s anonymously-sourced scoops, the Chinese AI company Deepseek is somehow training its latest models on Nvidia’s latest GPUs—ones built on the Blackwell architecture, pretty much the most in-demand pieces of technology in the universe. If that were true, one problem for Nvidia would be that giving companies in China access to the most advanced GPUs would be a violation of stringently enforced export rules—even after Trump moved to loosen restrictions earlier this week. 

But don’t worry, China hawks. According to a company statement viewed by Yahoo Finance, the folks at Nvidia “haven’t seen any substantiation or received tips of ‘phantom data centers’ constructed to deceive us and our OEM partners, then deconstructed, smuggled and reconstructed somewhere else.”

Phew. That’s a very specific denial that really zeroes in on the details of the story, but it’s good to know that (deep breath) fake data centers created for the purpose of deceiving Nvidia or its unwitting suppliers or customers, which are dismantled, smuggled, and rebuilt somewhere in China, is something Nvidia hasn’t seen substantiated reports of, or received tips about. 

“While such smuggling seems far-fetched, we pursue any tip we receive,” the Nvidia representative added, per CNBC.

And it’s true. It totally does sound farfetched if it’s not really happening. If it’s happening, the word for it is “ingenious.” In fact, it’s downright Now-You-See-Me-esque.

According to reports in May from this year, the lower-end prices of a single Blackwell GPU ranged from $6,500 to $8,000. That being the case, can you imaging the black market price? Such prices are a big part of why Nvidia is one of the rare AI companies that seem to consistently haul in money instead of just burning it, and are also why Nvidia bulls say the company is about to be worth $6 trillion.

And nothing hammers home the reasoning for an absolutely insane price tag on a piece of silicon quite like a cinematic (alleged) smuggling operation.