The "Megaspeed" Mystery: US Probes Singaporean Firm Suspected of Being a Secret Gateway for Nvidia Chips to China

At a meeting between Nvidia CEO Jensen Huang and top Asian clients in Taipei last June, the Singapore-based company Megaspeed stood out, preparing to purchase an estimated $2 billion worth of Nvidia AI technology. Despite being relatively unknown, Megaspeed and its executive, Alice Huang, have recently become a focal point of concern in Washington.

Officials at the US Department of Commerce are currently investigating whether Megaspeed, which has close ties to Chinese tech companies, is helping Beijing circumvent US export restrictions on certain advanced Nvidia chips, according to a report by The New York Times and informed sources.

Gaps in US Oversight and China's Tactics

The ongoing investigation raises questions about the accuracy of Nvidia's tracking of its AI chips' destinations and highlights the ease with which US export controls can be bypassed through global networks of intermediaries and shell companies. Chinese entities have resorted to building massive data centers in Southeast Asia and establishing smuggling networks to transfer potentially hundreds of thousands of prohibited chips to China.

Megaspeed exemplifies this challenge: after spinning off from a Chinese gaming company in 2023, it acquired approximately $2 billion in cutting-edge Nvidia products and routed them to data centers in Malaysia and Indonesia to serve Chinese clients remotely.

A US Bureau of Industry and Security official (responsible for export controls) inspected a Megaspeed data center in Malaysia. Insiders reported that US officials were concerned about Nvidia technology still in its original boxes, raising suspicion of potential reshipment, and suspected some chips had already been smuggled to China, though definitive evidence was lacking.

Nvidia and Megaspeed Positions, and Financial Ambiguity

Nvidia confirmed contacting the US government and stated that its audit concluded Megaspeed is wholly owned by a non-Chinese entity with no Chinese shareholders. The company found no evidence of chip diversion, maintaining that Megaspeed operates a "small commercial cloud" in compliance with export rules.

Megaspeed stated it is a Singapore-based company operating under all applicable laws, including US export control regulations.

However, ambiguity surrounds Megaspeed, which spun off from the Chinese gaming company 7Road (linked to state-backed investors) in 2023. The source of the billions used to purchase the chips is also unclear, especially since the majority of the chips were not bought directly from Nvidia but from the US branch of Inspur, a sanctioned Chinese tech company.

China's Strategy Against Restrictions

Technology experts assert that the Megaspeed story illustrates China's strategy to evade US restrictions using shell companies and data centers in intermediary countries to ensure advanced AI technology reaches Beijing. They emphasize that despite public claims of rejecting mid-range Nvidia chips (like H20), China is actively seeking the prohibited, ultra-powerful chips that only Nvidia can currently produce.

Experts believe traditional export controls are insufficient, noting that smuggled Nvidia chips are being sold with a 30-50% profit margin. A potential technical solution being discussed is allowing Nvidia to remotely track and deactivate chips found in prohibited countries, although circumvention of this solution remains possible.