NVIDIA CEO Says Using Smuggled AI Chips for Data Centers Is a ‘Dead End’

Jensen Huang’s comments come amid a long-running U.S. effort to restrict China’s access to advanced computing chips and systems containing them.

The logo of Nvidia Corporation is seen during the annual Computex computer exhibition in Taipei, Taiwan, on May 30, 2017. Tyrone Siu/Reuters

NVIDIA CEO Jensen Huang warned shareholders that attempts to build artificial intelligence data centers with smuggled chips are a “dead end,” saying the company provides no support or repairs for such products.

Huang made the remarks during the shareholder Q&A segment of NVIDIA’s June 24 annual stockholder meeting webcast.

“National security is first and foremost,” Huang said. “Where commercial opportunities conflict with U.S. national security, national security comes first.”

NVIDIA “complies with U.S. export controls” and works with partners’ legal and compliance teams as well as law enforcement, Huang said. He said the company’s compliance efforts have “repeatedly stopped would-be smugglers.”

“Advanced AI data centers are massive integrated systems that require trusted hardware, software, networking, and continuing support,” Huang said. “Trying to cobble together data centers with smuggled products is a dead end.”

“Building them out of contraband would be extremely difficult,” he said. “We do not provide any support or repairs for restricted products.”

Modern AI data centers are not just collections of chips. They depend on verified hardware, software, networking, integration, maintenance, and access to repairs. Without those layers, a smuggled or gray-market system may be difficult to operate reliably at scale.

Export Controls and Diversion Risks

Huang’s comments came amid a long-running U.S. effort to restrict China’s access to advanced computing chips and systems containing them.

The Commerce Department’s Bureau of Industry and Security (BIS) said in May 2025 guidance that advanced computing integrated circuits have been subject to BIS export restrictions since October 2022 and that the agency had expanded controls to address Chinese efforts to acquire the chips through transshipment, diversion, and access to data centers with advanced chips.

BIS said such chips and systems containing them can support China’s military modernization, including military decision-making, autonomous systems, radar, signals intelligence, jamming, weapons design, nuclear weapons, hypersonics, and other advanced missile systems.

The Justice Department (DOJ) announced in December 2025 that U.S. authorities had disrupted a China-linked AI-tech smuggling network and seized more than $50 million in advanced GPUs destined for China and other restricted locations.

The DOJ release said a Houston company and its owner pleaded guilty to smuggling and unlawful export activities involving Nvidia H100 and H200 Tensor Core GPUs. Prosecutors said others were charged in an alleged scheme that used straw purchasers, intermediaries, false paperwork, and relabeling to conceal the ultimate destination of export-controlled GPUs.

Huang did not identify any specific smuggling network, company, or shipment at the shareholder meeting.

Huang also told shareholders that the U.S. government had approved licenses for H200 shipments to China-based customers but that NVIDIA had “yet to generate any revenue” and remained uncertain whether imports would be allowed into China.

Taiwan Groups Press for Tighter Rules

Two days after Huang’s comments, Taiwan’s civil society figures and a lawmaker urged their government to tighten controls on high-end chip exports to China.

Lai Chung-chiang, convener of the Taiwan Economic Democracy Union think tank, said Taiwan does not list China as a controlled destination for chip exports and therefore lacks the criminal penalties that would apply under Taiwan’s Trade Act for some controlled-destination violations.

“You have not listed China as a controlled area for chip exports,” Lai said, according to NTD, a sister outlet of The Epoch Times. “You do not have criminal liability under the Trade Act. You only have a maximum fine of 3 million New Taiwan dollars [about $93,000].”

Lai said the penalty would be too low for companies involved in high-end semiconductor supply chains.

Lai also said Taiwan’s current control list covers wafer-manufacturing equipment but not exports of high-end chips to China.

Taiwan lawmaker Chung Chia-pin said the alleged gap should be closed by amending Article 13 of the Trade Act to add a national security basis for chip controls targeting mainland China.

“In the future, we should clearly add an item in Article 13 of the Trade Act, based on national security, that chips to the mainland area should be included on the control list,” Chung said, according to NTD.

The Taiwan groups cited cases involving Phytium Technology, TSMC, and Alchip as examples of why they believe Taiwan’s controls need to be strengthened.

The U.S. Commerce Department added Phytium and six other Chinese supercomputing entities to its entity list in April 2021, saying they were involved in building supercomputers used by China’s military actors, military modernization efforts, or weapons of mass destruction programs.

The Taiwan groups said the case demonstrated the need for stronger controls to prevent Taiwan-linked semiconductor supply chains from serving Chinese military-linked end users.