Nvidia has sharply reduced its AI chip sales network in Asia to block indirect exports to China.

Cryptopolitan, a blockchain media outlet, reported on Monday that Nvidia has cut its list of approved Asian distributors and buyers to about half and is applying new screening standards in Japan, Singapore and Malaysia.

More than half of existing buyers are reported to have been dropped from the approved list under the move. Companies that were removed can reapply if they meet the criteria. The biggest impact so far has been on neocloud providers, customised cloud platform operators for AI computing.

Nvidia's move coincides with a push by the U.S. government to more strongly block China's access routes to advanced AI semiconductors. Because Nvidia GPUs are key chips widely used to train and run large language models, they have been a major target of networks seeking to bypass U.S. export controls. Nvidia is reported to be trying to maintain access to other overseas markets by reducing the number of approved distributors and increasing on-site inspections.

The new screening process goes beyond document checks. Nvidia is conducting direct inspections of data centres, verifying customer contracts and even interviewing actual users. The U.S. Department of Commerce is also reported to be providing official oversight and support in the process. As the U.S. government steps up pressure to dismantle black-market broker networks, Nvidia has also increased the intensity of its response.

Enforcement has stepped up further recently. In the United States, a Super Micro co-founder was indicted in March on charges of leading a $2.5 billion supply-chain evasion scheme to send Nvidia chips to China through Southeast Asian intermediaries. Investigators believe the group removed equipment from Super Micro's original packaging and shipped it in unlabelled packaging to conceal high-performance hardware. Super Micro servers use Nvidia chips.

The U.S. Department of Commerce also issued additional guidance in May. It aims to block channels used by Chinese-affiliated operations in places such as Malaysia to bring in Nvidia Blackwell-series high-end processors. Some Chinese companies have obtained restricted hardware through branches in Singapore or Malaysia, and the Bureau of Industry and Security required a licence for exports of top-tier AI processors if the parent company is based in China, regardless of the actual delivery destination.

Demand in China remains tight. The Chinese government is blocking domestic sales of Nvidia's H200 to foster its semiconductor industry, but local supply is failing to keep up with demand. A technology industry executive said all domestic suppliers were sold out and that even lower-grade chips that no one wanted before are being bought as long as they can be used.

The Chinese government expects domestic production to triple by the end of 2026, but manufacturing capacity still lags major competitors. Against that backdrop, there is also speculation that Alibaba Group Holding, ByteDance and DeepSeek could soon be allowed access to the H200. Even if permitted, use could be limited to AI training, with inference work left to domestic chips and use barred for sensitive customer data. Imports would also be limited to about 200,000 units, less than half of what companies demanded early this year.

Nvidia executives also appear to be focusing more on responding within the current regulatory framework than on trying to retake the China market. Chief Executive Jensen Huang (젠슨 황) said in May of Huawei, "It is very strong. As we have effectively pulled out of that market, the local chip ecosystem is working well." He added that Nvidia had "largely given" the China market to Huawei.

Nvidia's restructuring of its Asia sales network is therefore seen not as a simple distribution cleanup, but as a signal of a broader adjustment of the global AI semiconductor supply chain between U.S. technology controls on China and China's push to foster domestic semiconductors. For now, approval screening and on-site verification in Asia's intermediary market are likely to become more stringent.