Bloomberg reporter Edwin Chan described “a fairly sophisticated operation, worldwide operation, involving many, many companies, an unknown number of companies, and billions of dollars in smuggled semiconductors.” A network spanning many firms and countries is much harder to police than one-off smuggling, and that is the core story for NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) shareholders.
Where the Diverted Chips Reportedly End Up
Edwin Chan said chips have been “traced into China,” where users such as Tencent, DeepSeek and Moonshot need them “to really produce the powerful frontier level LLMs that are now giving the likes of Anthropic and OpenAI a run for their money.” The reporting presents these firms only as end users of diverted chips.
A Year of Probes, Raids and Denials Investors May Have Missed
Chan’s section is the latest in a thread running through 2026. Every item below is a reported investigation or allegation.
- Bloomberg reported on August 27 that US authorities are probing Apex Logistics over alleged NVIDIA AI chip smuggling.
- Taiwan News reported that Super Micro Computer (NASDAQ:SMCI) Taiwan offices were raided in an alleged chip smuggling probe. Bloomberg reported Super Micro’s top management “didn’t know” of a diversion scheme.
- The Taipei Times reported Taiwan suspected NVIDIA chips were being smuggled to China via Japan.
- The Times of India reported NVIDIA offices in Taiwan were searched and an employee detained.
- The Bangkok Post reported SiamAI denies exporting US servers to China.
None of this reporting accuses NVIDIA itself of misconduct. NVIDIA faces no charges in any report above.
Chan’s Policy Paradox
Edwin Chan argued “If you are going to withhold chips from China, you are actually enabling that sort of self sufficiency drive.” Export controls meant to slow China’s AI progress fail if diverted chips arrive anyway, yet still encourage Beijing to fund homegrown alternatives. According to the section, Chinese firms are producing more capable processors for AI inference, while the most advanced training chips remain out of reach domestically. Inference runs existing models; training frontier models requires top-end hardware that diversion reportedly supplies.
What NVIDIA Has Disclosed About China
NVIDIA’s reported China business has nearly disappeared. The company shipped no H20 compute products to China in Q1 FY2027, compared with $4.6B in the year-ago quarter. In Q2, CFO Colette Kress said the company shipped “less than 1% of our total data center revenue in Hopper 200 products to customers based in China in accordance with the U.S. government licenses.” NVIDIA’s Q2 FY2027 earnings release guides Q3 revenue to $108.0B +/- 2%, excluding China Data Center compute revenue.
How the Stock Has Traded Through All of It
NVIDIA was at $236.99 in a delayed intraday quote as of 10:34 AM ET on October 2, 2026, up 2.66% on the session. The stock is up 5.53% over one week, up 9.12% over one month, up 27.37% year to date, up 26.87% over one year and up 1,047.57% over five years. A year of probes, raids, a detained employee and a reported multibillion-dollar network has come alongside large gains. The market does not yet appear to view this as a risk to NVIDIA.
Interpretation: First, chips reaching China by any path show demand that controls cannot suppress. Second, NVIDIA books revenue when it sells to authorized buyers, so downstream activity may not show in reported results. Third, investors may believe enforcement risk falls on intermediaries.
Are Export Controls Working?
Judged by reporting, controls have cut NVIDIA’s China sales to almost nothing, yet advanced chips reportedly still reach Chinese AI labs in volume. Watch whether enforcement moves beyond logistics intermediaries to larger firms, whether China’s domestic training capability advances, and whether Washington reviews the policy. The expansion underneath all of this still needs power, cooling and networking from somebody, and we rounded up seven of those suppliers in a free AI infrastructure report.