Restricted AI Chips, Third-Country Routes: How China’s Nvidia Supply Chain Is Being Probed

Fresh scrutiny of alleged shipments of restricted artificial intelligence chips to China has put companies and intermediaries in Singapore and Malaysia under the spotlight, with US prosecutors and regional authorities documenting suspected diversion through third-country routes. India's connection to the issue, however, remains a separate question: official records establish export controls on certain advanced semiconductors, but no comparable Indian smuggling case has been confirmed by the government.

An investigation by The Information, alleged that a network of companies operating across China and Singapore helped move around 240,000 Nvidia H100, H200 and some A100 chips into China, involving shipments worth at least $7.5 billion. The report linked Singapore-based cloud computing firm Megaspeed and its Malaysian subsidiary Speedmatrix to the network. Reuters said it could not independently verify the allegations.

The report describes two routes: physically moving hardware into China and providing Chinese customers with computing capacity through data centres in Southeast Asia. The distinction matters. A physical shipment involves the movement and possible re-export of controlled equipment, while remote access to computing power raises separate questions about the location of hardware, the identity of users and applicable export restrictions.

How The Routes Allegedly Work

A separate US Department of Justice case provides a documented example of the alleged transshipment mechanism. In October, US prosecutors charged Greg Lui, owner of Earthmade Computer, with conspiring to smuggle more than $300 million worth of export-controlled servers containing US-made graphics processing units (GPUs) to China. The indictment alleges that servers were purchased using false end-user documents, shipped through Malaysia and Singapore, and then re-exported to Chinese buyers. One shipment of 27 servers worth about $7.6 million was sent to Kuala Lumpur before being transferred to a China-based buyer, according to the indictment. The charges remain allegations.

Malaysia has also recorded a series of seizures. Customs officials said 30 servers containing advanced AI chips, valued at RM49.5 million (about $12.1 million), were seized at Kuala Lumpur International Airport on October 15. The equipment had allegedly been declared as electronic components and was intended for re-export to another Asian country. Officials linked it to a suspected syndicate behind five attempted operations, including a June seizure of 72 servers. They have not disclosed the latest shipment's origin or destination.

Singapore's position requires a separate distinction. Its police have charged four individuals and four companies in server-supplier fraud cases, involving alleged false claims that Singapore-based firms would be the end users of equipment purchased from suppliers including Dell and Super Micro Computer. The Ministry of Home Affairs says investigations into Megaspeed are ongoing. It has also clarified that Singapore does not enforce unilateral US export controls, although it will prosecute fraud and violations of its own laws. It rejected claims that its authorities had investigated Alice Huang over alleged Chinese intelligence links.

Where Does India Fit?

India's Directorate General of Foreign Trade has included certain advanced integrated circuits and computers containing them in Category 7 of its SCOMET export-control list. The provisions cover chips meeting specified technical performance thresholds, rather than all commercially available processors or GPUs.

The available official Indian material establishes a regulatory framework, not a confirmed case of advanced AI chips being smuggled through India to China. For now, the documented enforcement trail is centred on Singapore and Malaysia, while India's role remains a question for further trade and enforcement scrutiny.