Authorities in Singapore have launched an investigation into artificial intelligence computing firm Megaspeed, a customer of U.S. chip giant Nvidia, for allegedly helping Chinese companies circumvent restrictions on advanced American semiconductor exports.

In an email to CNBC, the Singapore Police Force confirmed that “investigations are ongoing into Megaspeed for suspected breaches of our domestic laws.”

This inquiry follows a report by The New York Times stating that the U.S. Commerce Department is also examining whether Megaspeed violated American export controls, according to anonymous officials familiar with the matter.

The dual investigations could renew scrutiny over Nvidia’s compliance systems and its ability to monitor the global distribution of its high-performance AI chips, which are subject to strict U.S. export rules.

A spokesperson for Nvidia said the company had coordinated with the U.S. government and conducted its own internal review, finding “no reason to believe products have been diverted.” The statement added that Nvidia representatives visited multiple Megaspeed facilities earlier this week and “confirmed what we previously observed—Megaspeed is operating a small commercial cloud service, similar to other companies worldwide, in full compliance with U.S. export control regulations.”

Neither Megaspeed nor the U.S. Commerce Department has responded to requests for comment.

According to The New York Times, Megaspeed, which separated from a Chinese gaming company in 2023, reportedly purchased nearly $2 billion worth of Nvidia’s advanced chips through its Malaysian subsidiary.

Growing Concerns Over Export Loopholes

The Megaspeed case has amplified concerns about loopholes in U.S. export restrictions on advanced technologies such as Nvidia’s AI processors. Washington has long limited the sale of cutting-edge chips to China, citing national security risks and fears that such technology could accelerate Beijing’s military and AI capabilities.

However, experts and lawmakers in Washington have warned that enforcement gaps remain. Reports have pointed to the emergence of a thriving underground market for smuggled Nvidia chips, raising doubts about the effectiveness of current controls.

Earlier this year, the U.S. House Select Committee on China questioned Nvidia’s chip exports to China and Southeast Asia following reports that Chinese AI start-up DeepSeek had used Nvidia hardware to train a high-performing AI model.

Singaporean authorities also initiated a separate investigation months ago into suspected smuggling of restricted Nvidia chips that were officially declared as shipments to Malaysia but may have been rerouted elsewhere, including China.

Responding to these developments, Malaysia announced in July that it would require government permits for all Nvidia chip exports and transfers, tightening oversight of potential diversions.

Southeast Asia as a Strategic Workaround

Reports have also indicated that some Chinese firms are leveraging Southeast Asian data centers to access restricted computing power. These facilities—often equipped with high-end Nvidia chips—operate in regions such as Malaysia and Indonesia, while remotely serving clients in China.

According to The New York Times, Megaspeed utilized data centers in both Malaysia and Indonesia in this way, effectively creating a legal gray zone that enables Chinese entities to access U.S.-restricted technology indirectly.

While Nvidia has not directly commented on these specific claims, the company emphasized that it supports U.S. leadership in the AI sector and aligns with the U.S. government’s recent “AI Action Plan,” which promotes adherence to American standards for national and economic security.

The Trump administration has indicated its intention to preserve Nvidia’s global leadership—even within China—while simultaneously enhancing enforcement of export restrictions.

In Washington, lawmakers have proposed new legislation requiring Nvidia to embed tracking mechanisms in its chips to prevent unauthorized use. Beijing, however, has pushed back strongly against such measures and recently halted imports of certain Nvidia products after the U.S. announced plans to ease restrictions on some chips designed specifically for the Chinese market.