Nvidia creates a whitelist: over fifty percent of its Asian clients are excluded from it.

      Nvidia has significantly reduced the number of customers in Asia authorized to purchase its artificial intelligence chips, as reported by the Financial Times, citing three informed sources. The company has created a new list of approved regional buyers and has intensified its due diligence in Singapore, Malaysia, and Japan—the three regions most frequently implicated in chip-diversion incidents over the last two years.

      This stricter vetting process has resulted in the exclusion of over half of Nvidia’s previous customers in these areas. Companies that have been excluded can reapply if they make necessary adjustments. Nvidia's decision was not made out of eagerness but rather in response to pressure from Washington, following a series of enforcement actions that revealed significant vulnerabilities in the company's distribution networks in Asia.

      In March, US prosecutors charged a co-founder and two employees of Supermicro for an alleged scheme that aimed to transfer about $2.5 billion worth of Nvidia chips to China through a Southeast Asian firm serving as a proxy to route hardware from Taiwan. On May 31, the US Commerce Department’s Bureau of Industry and Security issued guidance indicating that an export license is mandatory for advanced computing chips sent to any entity whose ultimate parent company is based in China or Macau, regardless of the location of that entity. This clarification transformed a shipping issue into a corporate-ownership query, rendering a Singapore address ineffective.

      Washington had already taken steps to close the subsidiary loophole that permitted Chinese companies to make purchases through overseas branches. Nvidia’s new white list serves as the business implementation of this concept, focusing on regulating the customer list rather than monitoring every shipment.

      The smuggling of restricted Nvidia hardware can be attributed to economic factors, as the scarcity of this hardware has resulted in significant price premiums within China, with B300 servers reportedly selling for around $1 million—nearly double the US list price. Such margins provide ample funding for creative logistics.

      Nvidia has consistently maintained a public stance that smuggled data centers are not a viable option, arguing that a grey-market cluster lacks the capacity for servicing, updates, or support and that national security is paramount. The white list embodies this argument in a procedural format.

      The competitiveness of this strategy is evident, as Southeast Asia has rapidly emerged as one of the fastest-growing markets for AI infrastructure. Malaysia, in particular, has invested three years into attracting data center investments by promoting affordable land, low energy costs, and minimal scrutiny.

      Reducing the regional buyer base by more than half, even temporarily, effectively shifts business to those able to provide similar computing power without the compliance burdens, which increasingly favors domestic Chinese chipmakers. Additionally, this situation complicates matters for legitimate operators. A Malaysian or Singaporean company that has committed no wrongdoing may find itself excluded because of a difficult-to-explain shareholder situation, and the pathway to re-entry involves a reapplication process with undisclosed criteria from Nvidia.

      Beijing has not reacted as an aggrieved customer. Last year, Washington permitted Nvidia to sell the older H200 model in China, after which China halted domestic sales of the product, partly to safeguard its own chip industry. Both governments now seem to be limiting the same trade for opposing reasons.

      Nvidia has not publicly addressed the white list, and the FT article does not specify how many companies are currently on it. Nvidia’s shares fell approximately 3.5% on Monday amidst a broader decline in the tech sector, though this movement aligns more with the overall chip market than with this specific issue.

      However, the vetting process does not eliminate the fundamental awkwardness of the situation, where a US-listed company is now keeping a private registry of potential Asian purchasers of its most valuable product, at the behest of a government that prefers not to create the list itself.