Nvidia Halves Asian Customer List to Curb Chip Smuggling

Nvidia has dramatically tightened its export controls in Asia to combat a $2.5 billion black-market smuggling operation that diverts AI chips into China. CEO Jensen Huang condemned the scheme during a shareholder meeting, describing it as a "dead end" because smuggled hardware lacks the critical software updates and security patches necessary for the AI ecosystem.

To enforce compliance with United States government export bans, the company reduced its number of authorized customers in Asia by more than half. This reduction follows the implementation of a new "white list" for approved buyers, with an emphasis on intensified due diligence in Japan, Malaysia, and Singapore. These measures aim to prevent advanced processors, including Blackwell chips, from reaching Chinese entities through overseas subsidiaries.

The company's new compliance framework requires staff to interview end users, verify contracts, and conduct physical visits to data centers. These restrictions have primarily impacted neo-cloud providers, though companies may reapply if they update their procedures. These actions follow May guidance from the U.S. Department of Commerce. Despite these regulatory challenges, Nvidia reported strong financial growth for the quarter ended April 26, earning $81.6 billion in revenue with $58.3 billion in net income.