A new investigation has mapped how billions of dollars worth of export-restricted Nvidia AI chips have continued to reach China despite U.S. regulations. The report from C4ADS identifies three main channels for the flow: direct purchases through research institutions, drop-shipping routed through Southeast Asian countries, and purchases made through layered shell companies. C4ADS cautions that its figures account only for the chips it could explicitly name, meaning the true volume of hardware changing hands could be substantially larger. An earlier report by Epoch AI estimated that roughly a third, and possibly most, of China's AI compute capacity comes from smuggled GPUs.
The commercial backdrop matters for U.S. buyers and policy. Nvidia has most of its chips manufactured and packaged by TSMC in Taiwan, and a single accelerator may pass through several testing rounds before reaching a customer's data center. Washington bars sales of H100, A100 and Blackwell-family chips to China, while the lower-end H20 and the more powerful H200, along with AMD's MI325X, can be traded case by case, with the H200 carrying a 25% tariff. Beijing generally discourages purchases of American AI chips to advance Huawei-led domestic efforts, yet reports indicate authorities frequently overlook gray and black-market imports, and 2026 brought official exceptions for ByteDance, Alibaba and Tencent.
The first smuggling avenue involves Chinese universities and research institutions buying Nvidia GPUs inside sprawling multi-vendor contracts routed through small regional Chinese integrators. C4ADS says some of these buyer institutions have ties to the Chinese Communist Party and the country's defense and intelligence sectors. It tracked 56 chips worth $1.7 million moving this way between July 2025 and January 2026, and it says a 2024 investigation of multi-year government records uncovered $6.48 million worth of silicon heading to China through the same method.
The second route is technically legal drop-shipping through Vietnam, India and Malaysia. C4ADS analyzed transactions from 2022 through 2025 and found $13.4 million of Nvidia A100, H100/GH100 and AD102-series GPUs routed through those countries in what it describes as a consistent pattern. Some chips traveled from Taiwan to Vietnam, potentially aided by Vietnam's chip testing facilities providing a plausible reason for the trip, and the investigation notes the timing, volume and destination of many shipments could hide their true purpose.
Part of the purportedly tested chips continued to Hong Kong, where two companies dominate the import side: Profit New Limited and ELB International Limited. Profit New Limited traded $8.7 million of silicon in a single day in March 2025, likely preparing for tighter export controls that arrived in April 2025. Some high-value shipments in the dataset appeared to lack cost, insurance, weight or freight values and carried round zeros in their import value declarations, raising doubts about their documentation.
The largest category is opaque ownership through shell companies. C4ADS attributes $4.6 billion worth of chips heading to China to a single entity, Megaspeed International, reportedly the biggest Southeast Asian importer of Nvidia hardware between 2023 and 2025, though its actual ownership remains unresolved. Megaspeed has companies across Singapore, Indonesia and Malaysia and was purchased in 2023 by Swiftdata, another Singaporean firm, after previously being owned by Chinese gaming firm 7Road Holdings. During the transition its major shareholder was temporarily Chinese businesswoman Huang Le, a director of a Hong Kong company that bought transceivers from Megaspeed Indonesia, and C4ADS believes she may still be directing the firm, as she was identified as its chairwoman at a conference as recently as 2025.
C4ADS recommends that the U.S. Bureau of Industry and Security receive additional staff and resources to verify where goods land after sale and who their end users are, something the report acknowledges could be difficult given the cooperation required from other nations. The researchers call for semiconductor manufacturers, equipment makers and distributors to invest in end-user verification that goes beyond restricted-party list screening, incorporating on-the-ground due diligence, corporate ownership tracing and post-shipment verification. For the private sector, C4ADS advises firms to fold geopolitical and risk analysis into their frameworks to assess whether direct or downstream customers could be supplying China's military or intelligence sectors.
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