Singapore authorities are investigating artificial intelligence computing firm Megaspeed, a customer of American AI chipmaker Nvidia, for allegedly helping Chinese companies evade curbs on U.S. chip exports.
“The Singapore Police Force confirms that investigations are ongoing into Megaspeed for suspected breaches of our domestic laws,” the police told CNBC in an email.
The probe comes as the New York Times reported Thursday that the U.S. Commerce Department was also investigating whether Megaspeed skirted American export controls, citing anonymous officials and other people familiar with the matter.
The twin investigations into Megaspeed could raise questions about Nvidia’s ability to track its chip exports effectively and to comply with U.S. restrictions on the sale of its most advanced AI chips to China.
According to an Nvidia spokesperson, the company had engaged the U.S. government on the matter and performed its own inquiry, without identifying “any reason to believe products have been diverted.”
“NVIDIA visited multiple Megaspeed sites yet again earlier this week and confirmed what we previously observed—Megaspeed is running a small commercial cloud, like many other companies throughout the world, as allowed by U.S. export control rules,” they said in a statement shared with CNBC Friday.
Megaspeed didn’t immediately respond to a request for comment, nor did the U.S. Commerce Department.
The Times reported that Megaspeed, which spun off from a Chinese gaming company in 2023, bought nearly $2 billion worth of Nvidia’s most advanced products through its subsidiary in Malaysia.
Export loophole concerns
The case surrounding Megaspeed highlights broader concerns about the effectiveness of U.S. export restrictions on advanced technologies, such as Nvidia’s AI processors.
The U.S. government has, for years, restricted sales of advanced AI chips to China, citing concerns they could strengthen Beijing’s military and give it an edge in broader AI development, among others.
But experts and lawmakers in Washington have long warned about loopholes in Washington’s export controls, while reports indicate that a massive black market for smuggled Nvidia chips has also emerged.
The House Select Committee on China in April questioned Nvidia’s shipment of chips to China and Southeast Asia after reports that Chinese AI start-up DeepSeek used the company’s chips to train a groundbreaking AI model.
Just a few months prior, Singapore had launched a separate probe into the alleged smuggling of restricted Nvidia chips, which were declared bound for Malaysia but may have been diverted elsewhere, including China.
In response to such cases and mounting U.S. pressure, Malaysia announced in July that it would begin requiring permits for all exports and transfers of Nvidia chips.
Outsourcing to Southeast Asia?
Chinese companies have also exploited a legal gray area by tapping into computing power from data centers in Southeast Asia equipped with restricted Nvidia chips, according to recent reports.
For example, Megaspeed was using its Nvidia chips for data centers in Malaysia and Indonesia, which appeared to be remotely serving customers in China, according to the Times.
Nvidia didn’t directly address this claim, but said in its statement that the Trump administration’s recent AI Action plan “rightfully encourages businesses worldwide to embrace U.S. standards and U.S. leadership, benefiting national and economic security.”
The Trump administration has recently signaled interest in ensuring Nvidia maintains its global market dominance — even in China — though its AI Action plan also called for strengthening enforcement of export controls globally.
Lawmakers in Washington have also proposed bills that could see Nvidia required to outfit its chips with tracking systems.
Such proposals have received pushback from Beijing, which froze imports of Nvidia’s chips after the Trump administration said it would roll back restrictions on some of the firm’s chips made specifically for China.
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