Background: Megaspeed and Accusations
Singapore-based
Megaspeed International Pte Ltd is under intense scrutiny following allegations it helped reroute billions of dollars’ worth of restricted
Nvidia AI chips to China, using Malaysia and Indonesia as intermediaries[1][2][4][5]. The U.S. Commerce Department and Singaporean authorities have launched comprehensive investigations into potential violations of American export controls[1][2][5].
- U.S. Senator Tom Cotton has formally urged the Commerce Department to prioritize the probe, highlighting concerns that Megaspeed’s activities undermine U.S. efforts to restrict China’s access to high-end AI chips[1].
- Reports state that Megaspeed, founded as a Singaporean subsidiary by the Chinese gaming and cloud firm 7Road, allegedly procured around $2 billion in restricted Nvidia GPUs for re-export or cloud access to Chinese entities[2][3].
- Megaspeed reportedly acquired the Nvidia hardware through Aivres Systems, a U.S.-based affiliate of China’s Inspur (previously sanctioned for supplying the Chinese military)[2].
Investigation Details and Compliance Loopholes
Official concerns heightened after the U.S. Bureau of Industry and Security inspected Megaspeed’s Malaysian data center and discovered sealed Nvidia servers, indicating they might be staged for re-export rather than local use[2].
- Authorities believe that cloud-access to the restricted AI chips may have circumvented U.S. export controls, possibly allowing entities in China to tap into U.S. technology through a legal gray area[2][3].
- Singaporean police have confirmed an ongoing investigation into whether Megaspeed breached local laws, but specifics were not publicly disclosed[1][2][5].
- Journalists investigating Megaspeed’s physical offices found little actual business activity or technical staff, further intensifying suspicions about its operations[2].
Response from Nvidia and Ongoing Scrutiny
Nvidia has stated that, according to its internal review, Megaspeed qualified as a legitimate purchaser and showed no evidence of diversion[2][5]. The company claims Megaspeed was fully owned and operated outside China, lacking any Chinese shareholders. However, some U.S. officials argue that the links between Megaspeed, Chinese entities, and sanctioned firms should have triggered stricter controls[2].
Geopolitical and Industry Implications
This controversy comes amid continuing technology export restrictions by the U.S. and retaliatory measures from China, including rare earth export curbs[3]. The case spotlights loopholes in global supply chains for critical technologies and has prompted fresh debate about the effectiveness of current U.S. export enforcement measures[5].
The investigation is ongoing, with both U.S. and Singaporean authorities expected to intensify scrutiny of international AI hardware supply chains and their vulnerabilities to exploitation by intermediaries with hidden ties to sanctioned countries[1][2][5].
