Singapore authorities are investigating artificial intelligence computing company MegaSpeed, a customer of a US AI chip maker Nvidiafor allegedly helping Chinese companies evade U.S. chip export regulations.
“Singapore Police can confirm that an investigation is underway into MegaSpeed for possible violations of domestic law,” police told CNBC via email.
The investigation comes after The New York Times reported Thursday that the U.S. Department of Commerce is also investigating whether MegaSpeed was circumventing U.S. export controls, citing anonymous officials and people familiar with the matter.
The two investigations into Megaspeed could raise questions about NVIDIA’s ability to effectively track its chip exports and comply with U.S. regulations on sales of cutting-edge AI chips to China.
An Nvidia spokesperson said the company worked with the U.S. government on the issue and conducted its own investigation, but found no “reason to believe the product was diverted.”
“NVIDIA revisited multiple Megaspeed sites earlier this week and confirmed what we had previously observed. Megaspeed, like many other companies around the world, runs a small commercial cloud as permitted by U.S. export control regulations,” it said in a statement shared with CNBC on Friday.
Megaspeed and the U.S. Department of Commerce did not immediately respond to requests for comment.
The Times reported that MegaSpeed, which was spun off from a Chinese gaming company in 2023, has purchased nearly $2 billion of Nvidia’s cutting-edge products through its Malaysian subsidiary.
Concerns about export loopholes
The case surrounding Megaspeed highlights broader concerns about the effectiveness of U.S. export controls on advanced technologies such as Nvidia’s AI processors.
The U.S. government has long restricted the sale of advanced AI chips to China, citing concerns that China’s military could strengthen and gain an upper hand in areas such as widespread AI development.
But while experts and lawmakers in Washington have long warned of loopholes in Washington’s export controls, there are also reports of a large black market emerging for smuggled NVIDIA chips.
In April, the House Select Committee on China questioned Nvidia’s chip shipments to China and Southeast Asia after reports that Chinese AI startup DeepSeek used its chips to train breakthrough AI models.
Just a few months ago, Singapore launched a separate investigation into the alleged smuggling of regulated Nvidia chips, which had been declared destined for Malaysia but may have been diverted elsewhere, including China.
In response to such cases and increasing pressure from the US, Malaysia announced in July that it would begin requiring permits for all exports and transfers of NVIDIA chips.
Outsourcing to Southeast Asia?
Recent reports say Chinese companies are also exploiting legal gray areas by tapping computing power from data centers in Southeast Asia equipped with restricted Nvidia chips.
For example, Megaspeed is using its NVIDIA chips in data centers in Malaysia and Indonesia, and appears to be providing services remotely to customers in China, the Times reported.
Nvidia did not directly address the claim, but said in a statement that the Trump administration’s recent AI Action Plan “rightfully encourages companies around the world to embrace American standards and American leadership, benefiting our national and economic security.”
The Trump administration has recently expressed an interest in Nvidia maintaining its global market dominance in China, but the AI Action Plan also calls for stronger export controls globally.
Lawmakers in Washington are also proposing legislation that could require Nvidia to include tracking systems on its chips.
The proposal follows pushback from the Chinese government, which froze imports of Nvidia chips after the Trump administration announced it would lift restrictions on some of the company’s chips made specifically for China.
