The US government has spent years trying to keep its most powerful AI chips out of Chinese hands. That strategy is looking increasingly like a screen door on a submarine.
Chinese AI startup Moonshot AI reportedly trained its advanced Kimi K3 model, a 2.8 trillion parameter behemoth, using Nvidia’s high-end chips, including what appears to be the Blackwell or GB300 variants. White House OSTP Director Michael Kratsios stated on July 23 that Moonshot AI acquired servers equipped with GB300 chips in Thailand to develop its models, effectively sidestepping US export controls that have been in place since 2022-2023.
How China keeps finding workarounds
Moonshot AI isn’t the first Chinese company accused of getting its hands on restricted Nvidia hardware. DeepSeek, another major Chinese AI player, reportedly trained its latest model using Nvidia’s Blackwell chip in Inner Mongolia despite existing US bans on sales to China. That revelation surfaced back in February 2026.
And Moonshot isn’t done. The company is reportedly pursuing additional Nvidia Blackwell chips for its upcoming Kimi K4 model, signaling that whatever channels exist for acquiring this hardware remain open for business.
The Nvidia problem
US restrictions on Nvidia AI chip exports to China date back to 2022-2023, with renewed efforts to tighten loopholes as recently as May 2026. Despite those efforts, both Moonshot AI and DeepSeek have apparently managed to train frontier AI models using the very chips Washington doesn’t want them to have.
Moonshot AI recently raised $3.5 billion in funding, valuing the firm at $35 billion following the Kimi K3 launch. That kind of capital means these companies aren’t going away, and they’re clearly willing to pay premium prices for access to top-tier hardware regardless of the geopolitical friction involved.
What this means for investors
If the White House follows Kratsios’s statements with actual penalties against intermediary access points like Thai data centers, it could reshape how and where AI compute gets allocated globally. If it doesn’t, the market will price in a new reality: one where export controls are more theater than substance, and where the AI arms race between the US and China plays out on hardware that, technically, was never supposed to cross the border.