Smuggling of 1.5M AI GPUs could be the cause of Huang's departure

Leading semiconductor research firm SemiAnalysis believes that Jensen Huang's sudden departure from Nvidia may have been driven not only by revelations about his personal extramarital relationships, but also by widespread illicit exports of advanced AI accelerators to China. In its latest newsletter, analysts estimate that more than 1.5 gigawatts (GW) worth of restricted Nvidia hardware, which could be equivalent to up to 1.5 million GPUs, has reached the country despite U.S. export controls.

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Over 1.5 GW of Nvidia hardware subject to U.S. export restrictions ultimately ended up in China in recent years, according to SemiAnalysis' Accelerator Model, which tracks AI accelerator production and destinations. The estimate excludes processors that Nvidia specifically developed to comply with U.S. export rules, such as the H20 or H800. The firm also claims that the U.S. Department of Commerce has reached a similar conclusion about the scale of unauthorized shipments. Yet, SemiAnalysis does not disclose the exact number of accelerators shipped to China illegally, or their split between Nvidia's product generations.

The scale of the alleged diversions is particularly notable because modern AI accelerators require substantial power and infrastructure. While the report does not explain how it converts accelerator quantities into power figures, it is likely that the company uses package-level nameplate/rated power multiplied by the number of GPUs. Assuming that all of these AI GPUs were Nvidia H200 SXM rated for up to 700W, then China got around 2.142 million of such accelerators, while if all of these processors were B200 SXM rated for up to 1,000W, then we are talking about 1.5 million units. For a mixed deployment, the total would fall between these figures, depending on the proportion of H200 and B200 accelerators. To put these numbers into context, xAI's Colossus One had 220-230,000 Hopper H100 and H200 GPUs, whereas the Colossus 2 has a target of 1.2 million Blackwell B200 and B300 GPUs. That said, 1.5 GW of restricted Nvidia hardware in China represents an enormous amount of computing infrastructure, which is comparable, or even exceeds, the scale of xAI's entire existing Colossus operation.

While SemiAnalysis did not reveal all the cases in which restricted AI accelerators reached the People's Republic of China, it supports its assessment with two well-known cases of alleged GPU smuggling. The first involves Supermicro co-founder Wally Liaw, Taiwan sales executive Steven Chang, and contractor Willy Sun, who were charged in March 2026. According to the indictment, approximately $2.5 billion worth of servers were sold to a company in Southeast Asia, with $510 million worth of equipment subsequently diverted to China and obtained by Alibaba. Prosecutors allege that the defendants used substitute servers and transferred identification labels to conceal the actual destinations of the hardware during audits.

The second case involves nine individuals associated with Nvidia, Albatron, Chief Telecom, Flying Tiger, and Supermicro in Taiwan. The authorities accuse the group of arranging unauthorized exports of 130 Nvidia B300-based servers, 74 of which eventually reached China. The suspects used shell companies, forged documents, and declared Japan as the destination for servers that were actually bound for China, according to prosecutors. Taiwanese authorities discovered the operation during a drug smuggling investigation. Both cases are still before the courts.

Amidst the ongoing fallout and reports into Jensen's Huang's extramarital affair with Alice Huang, an alleged Chinese intelligence asset who was an executive at Megaspeed, one report claims that Ms. Huang was personally responsible for facilitating the smuggling of $7.5 billion of Nvidia AI hardware into China, around 240,000 GPUs, mostly H100 and H200 models.

The right timing?

SemiAnalysis suggests that the scale of these violations may explain why Huang's personal conduct became a major issue at this very point in time. The company's analysts speculate that some members of the U.S. intelligence community sought to remove Jensen Huang because he opposed more aggressive restrictions on China's access to American AI hardware. However, the report provides no direct evidence that intelligence agencies influenced Nvidia's board or that Huang participated in unauthorized exports.

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The timing also coincides with congressional efforts to advance the Remote Access Security Act (RASA), which passed the House of Representatives on January 12. The legislation is meant to extend U.S. export-control authority to remote access to advanced AI hardware hosted outside China, including data centers in Europe and the Middle East. SemiAnalysis reports that Nvidia and Oracle have actively opposed the proposal.

The analysts believe that Huang's departure essentially removes an influential opponent of stricter restrictions and accelerates efforts to block Chinese companies from accessing American AI hardware in the cloud. However, SemiAnalysis warns that truly all-inclusive restrictions could encourage Chinese developers to adopt domestic accelerators (something that Jensen Huang has consistently warned about), undermine international AI software collaboration, and ultimately weaken American high-tech companies.

Continued Chinese access to American AI accelerators offers several advantages to the U.S. technology industry, according to SemiAnalysis. Firstly, it generates revenue for American companies such as AMD, Nvidia, and cloud service providers. Secondly, when Chinese companies rent GPU capacity from data centers outside China, U.S. authorities retain the ability to monitor their activities and potentially terminate access if necessary due to national security concerns. Thirdly, prolonged reliance on American hardware reduces incentives for Chinese developers to adopt domestic AI accelerators, which could eventually compete with AMD and Nvidia in international markets.

Another important aspect is the contribution of Chinese developers to the global software ecosystem. On the one hand, Chinese laboratories have developed open-source technologies such as DeepEP, DeepGEMM, and MSA, which improve the efficiency of AI workloads on Nvidia hardware and benefit developers worldwide. In addition, American companies also depend on Chinese engineers, component suppliers, and manufacturers. Therefore, legal curbs that completely restrict Chinese developers' access to American AI accelerators could undermine international cooperation, reduce availability of open-source optimizations, and encourage Chinese companies to develop software specifically for domestic hardware.

On the other hand, access to advanced AI accelerators from AMD or Nvidia enables Chinese laboratories to develop increasingly sophisticated AI models, which will rival leading-edge models developed in America and perhaps create national security risks. To that end, SemiAnalysis acknowledges the need to limit China's access to advanced AI accelerators from U.S.-based companies, as they could, among other things, be used to develop weapons of mass destruction or undermine American national security in different ways. Yet, SA analysts argue that restrictions should focus on the amount and capabilities of hardware available to Chinese entities rather than completely prohibit any access.

SemiAnalysis seems to favor a system in which Chinese developers can rent computing capacity from trusted providers outside China under U.S. oversight. Such an approach could preserve American technological influence and commercial benefits and limit China's ability to acquire advanced AI infrastructure independently.

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Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

• Jensen: where is the proof? Here it is ya pos. Reply

• https://media1.tenor.com/m/tVGZC1fh0P4AAAAd/the-simpsons-well-duh.gif It seems like analysts just get paid to make the most obvious statements of all time combined with market predictions that anyone who is paying attention for 5 minutes could also figure out. Reply

• Let me fix the title for you: "smuggling... could be IS the underlying cause of Jensen Huang's departure". Jensen is a sociopath who thought that with all the people protecting him in the high places (Trump), he could get a way with committing what many now are referring to as treason. Jensen will be investigated, Nvidia will be investigated, US politicians who helped Jensen will be investigated. This is all going to be interesting. Nvidia's board of directors told Jensen to resign, so that the company could distance themselves from him as soon as possible. But Jensen couldn't do all this alone, so other heads at Nvidia are going to roll. Get some popcorn. Reply

• Edit: I agree Jensen needed to address the smuggling head on publicly instead of dismissing it as insignificant. Another theory going around is that Jensen was removed because he supported open source AI models. And another theory going around is that his departure is a convenient excuse for a massive selloff of stock by insiders before the AI bubble popped or some other AI industry advancement hurt Nvidia. Reply

• garbilkee said:Let me fix the title for you: "smuggling... could be IS the underlying cause of Jensen Huang's departure". Jensen is a sociopath who thought that with all the people protecting him in the high places (Trump), he could get a way with committing what many now are referring to as treason. Jensen will be investigated, Nvidia will be investigated, US politicians who helped Jensen will be investigated. This is all going to be interesting. Nvidia's board of directors told Jensen to resign, so that the company could distance themselves from him as soon as possible. But Jensen couldn't do all this alone, so other heads at Nvidia are going to roll. Get some popcorn.I dont see why a man like him needs to smuggle equipment to china ? He is a Billionare ... Reply

garbilkee said:Let me fix the title for you: "smuggling... could be IS the underlying cause of Jensen Huang's departure". Jensen is a sociopath who thought that with all the people protecting him in the high places (Trump), he could get a way with committing what many now are referring to as treason. Jensen will be investigated, Nvidia will be investigated, US politicians who helped Jensen will be investigated. This is all going to be interesting. Nvidia's board of directors told Jensen to resign, so that the company could distance themselves from him as soon as possible. But Jensen couldn't do all this alone, so other heads at Nvidia are going to roll. Get some popcorn.

• call101010 said:I dont see why a man like him needs to smuggle equipment to china ? He is a Billionare ...Billionaires are poors. If you're not at least a half-trillionaire, you're not trying hard enough. Reply

call101010 said:I dont see why a man like him needs to smuggle equipment to china ? He is a Billionare ...

• Let me try on this "national security" angle, and how I envision Huang (and other chipmakers') take on it: Exporting chips to China didn't become a concern until recently (the first Trump administration), when the US realized that China is catching up on tech--and China was already way ahead in manufacturing. Chip export restrictions up to that point were mainly about military use. But Trump then also restricted chip exports on commercial use. This was before AI became a thing, ie before ChatGPT which happened in 2023. Biden dramatically expanded upon Trump's chip export restrictions. It was no longer a company-by-company blacklist, but an industry-wide ban. Then Trump came back into power, and we get the whole tarriff business on top of more chip bans. China fought back with rare earth, and Trump backed down. But the chip bans remain. Simplified version. The conundrum for tech businesses like Nvidia/AMD was that the bans were a major hit on their businesses--China is a major tech buyer--and their argument is that the ban does more harm than good, because China can, and is, developing its own home-grown tech. The short-term gain outweighs the long-term harm. There's some truth to that, but as always, it depends on your view. US politics and politicians tend toward short-term thinking. And to be perfectly blunt, for US transplants like Huang, who is native Taiwanese, and notion of "US national security" probably doesn't weigh as heavily as the burden of having to comply with it. To him, and likely many other businesses, it's just another political burden to work around. Again, there's some truth to that. So, it wouldn't take much for Huang to try to skirt the export restrictions. I can attest, because I'm a transplant. There are a lot of US-first jingoism going around. Like how if we can get rid of immigrants, the country will be better off. Etc etc. Peeps harping on the "national security" bit as if it's some sort of cardinal sin. It isn't. And those who've read enough tech news realize that Dylan Patel, the principal of SemiAnalysis, isn't without controversy. He's been criticized of being biased and inflammatory in his reporting. This bit that Huang's ouster was because of "chip smuggling" is fairly blatant BS. Both the Trump admin and the Nvidia board couldn't care less about the "smuggling." Huang was brought down by the tawdriness of the sex scandal. Reply

• Seems like this article is preconcluding that Megaspeed is smuggling AI chips into China. Let me be clear, chips have been smuggled into China no doubt. Jensen did have an affair/or more than one, no doubt. But whether the smuggling’s done by Megaspeed or some other(probably hundreds of possible routes) methods hasn’t been proven by Singaporean nor US authorities. The fact that so many numbskulls in comments all over the net preempting Alice as a Chinese spy and Jensen a traitor have been exactly what the CIA is hoping for. Throw a bone out there, the dogs come sniffing. Humanity has an untamed appetite for consipracies and anything that makes for good talking points. That would be something the CIA would bank on. This is for all anyone knows, a potential warning shot from the gov. agency, ‘we could destroy you if you don’t play by the rules’. This whole accusation was thrown out to the US media by gov. officials(no proof given as per usual) and you know how corrupted this government can be. It has proven without fail, the media can spin anything and the public’s vivid imagination takes it the rest of the way. Reply

• And water is, as we know, wet. Still. Reply

• Not defending Jensen or Nvidia, but I really feel like this is a bigger sign that the whole strategy and the amount we have spent on trying to stop all of this...was all done horribly wrong. This feels more like a bunch of rich people screwing us all over to get around things...and rich people letting them do it...and that's it. The admin knew a damn year ago and did nothing. Reply