Nvidia Halves Approved Asia Buyer List to Curb Chip Flow to China, FT Reports

Nvidia has cut its list of authorized customers in Asia by more than half, implementing stricter compliance checks to prevent its advanced artificial intelligence chips from being funneled to China, according to a Financial Times report citing three people with knowledge of the matter.

Heightened Vetting Process

The U.S. chipmaker has reportedly established a new “white list” of approved Asian buyers for its products. This involved intensifying its due diligence process in key regional hubs, including Singapore, Malaysia, and Japan.

The new vetting standards excluded more than 50% of the company's previous customers. However, the report noted that these firms could reapply for authorization after making necessary changes to their compliance procedures.

Context: US Export Controls

Nvidia's actions are a direct response to increased pressure from Washington to close loopholes that allow Chinese companies to acquire high-end U.S. technology despite strict export controls. U.S. authorities have been focused on preventing advanced semiconductors, which are critical for AI development, from reaching China through intermediary countries.

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Washington has maintained export restrictions on advanced AI chip sales to China since at least 2021. This has forced companies like Nvidia to navigate a complex and evolving regulatory landscape while managing a global supply chain.

Enforcement and Market Impact

This heightened scrutiny comes amid active enforcement by the U.S. government. In March, federal prosecutors charged a co-founder of Supermicro and two other individuals with allegedly smuggling $2.5 billion worth of Nvidia chips to China from Taiwan by using a Southeast Asian company as a proxy.

For investors, Nvidia’s move underscores the growing operational and compliance risks associated with U.S.-China tech tensions. While ensuring compliance with U.S. law is paramount, the stricter vetting could impact sales channels and relationships in the crucial Asian market.