Singapore’s reputation as a global semiconductor hub is facing renewed scrutiny following allegations that Chinese-linked companies may have used the city-state to gain access to restricted Nvidia chips through a suspected illicit trading network.
The controversy has also drawn attention to Nvidia founder Jensen Huang, who reportedly stepped down from the US chip giant on Thursday after admitting to an affair with Alice Huang, a woman who previously ran Singapore-based data centre company Megaspeed, one of Nvidia’s major chip buyers.
For decades, Singapore has built its reputation as an open and business-friendly economy, offering companies access to both the US and Chinese markets. The artificial intelligence boom has further strengthened its position as a major trading centre for high-end semiconductor chips.
Last year, Singapore was Nvidia’s second-largest billing centre globally, accounting for nearly a fifth of the company’s revenue. However, less than 1% of those earnings came from chips that were actually delivered to Singapore, highlighting the city-state’s role as a regional hub where companies place orders before sending equipment elsewhere.
This arrangement has raised concerns among US officials since 2022, when Washington introduced restrictions preventing advanced American semiconductors from being exported to China or acquired by Chinese companies.
Megaspeed has emerged as a key example of the potential loopholes. The company became South-East Asia’s biggest buyer of Nvidia chips and is suspected of providing Chinese companies with backdoor access to the technology through its data centres in Malaysia, Indonesia and Thailand.
Although Singapore does not prohibit the transfer of advanced AI chips to overseas companies, such transactions could violate US export controls.
Singapore has maintained that it does not enforce unilateral export restrictions imposed by other countries, but expects businesses operating within its jurisdiction to comply with those regulations.
Authorities have taken action in several related cases, charging four companies and five individuals, including Chinese nationals, with offences such as fraud following US concerns that Chinese AI firm DeepSeek had obtained Nvidia chips through third parties in Singapore and elsewhere.
However, investigating Megaspeed has proved more challenging.
In a statement on Thursday, the Singapore government said it had been investigating since February 2025 whether Megaspeed and other companies made false declarations about data servers purchased and exported through the country.
The firms had declared that the equipment would be sent to neighbouring Malaysia, but authorities suspect its actual destinations were elsewhere.
Singapore also sought assistance from US authorities several times to obtain information from Supermicro, an American company understood by the BBC to have supplied computer servers to Megaspeed.
However, Singapore said it had received only limited information or assistance despite repeated requests. The BBC has sought comment from the US State Department.
Authorities also investigated Alice Huang over any possible involvement in Megaspeed’s suspected fraud, rather than espionage.
However, they found insufficient evidence of criminal activity and allowed her to leave Singapore in February this year after holding her passport for several months.
Nearly two years after the investigation began, Singapore has yet to charge Megaspeed or any companies and individuals linked to the case. Investigations by both Singapore and the US remain ongoing.
Concerns about the company’s activities had surfaced earlier. In 2024, US officials reportedly visited a Megaspeed-owned data centre in Malaysia and found Nvidia technology still inside its boxes, raising suspicions that high-end chips were being shipped elsewhere, according to The New York Times.
A Bloomberg report last year also suggested that Megaspeed had imported 50,000 more chips than Nvidia could account for. Nvidia subsequently revised its figures after visiting additional warehouses.
Megaspeed has consistently maintained that it operated lawfully, saying previous inspections by authorities found no evidence of illegal activity.
On Thursday, the company said it welcomed appropriate government scrutiny and remained committed to working constructively and transparently with the US government.
China has also repeatedly rejected accusations that its companies and institutions were illegally obtaining advanced American chips.
Beyond the semiconductor investigation, the case has raised questions about how Singapore’s openness could be exploited by foreign companies seeking to conceal their origins or activities.
In recent years, the city-state has attracted numerous Chinese businesses, with technology companies such as TikTok and Manus establishing their global headquarters there.
Singapore’s business-friendly environment, coupled with its predominantly ethnic Chinese population and generally positive public views towards China, has made it an attractive base for Chinese firms seeking international customers and investors.
Winston Ma, an adjunct professor at New York University’s School of Law, said Singapore offered Chinese companies a location close to mainland China while providing a neutral business address accepted by global investors.
However, critics have warned of a practice known as “Singapore-washing”, in which Chinese companies use the city-state’s reputable international image to obscure their origins, reduce scrutiny and potentially conceal questionable activities.
Washington-based security analysis group C4ADS told the BBC that it believed Alice Huang’s establishment of Megaspeed was an example of this practice.
BBC checks of corporate records in China, Hong Kong and Singapore found that Huang sold a gaming company and its subsidiaries to Chinese gaming firm 7Road in 2019.
In March 2023, a Singapore subsidiary of 7Road appointed Huang as its executive director. The company changed its name to Megaspeed the following day.
Huang led the business for eight months before transferring ownership to a Singaporean man.
During her time at the company, Megaspeed underwent what C4ADS described as a critical period of corporate restructuring and regional expansion, raising questions about whether its Singaporean identity was genuine or whether it remained effectively under Chinese control.
C4ADS further assessed that Huang continued to exercise practical control over the company after the transfer, citing her connections through another business and LinkedIn posts in which she continued to identify herself as Megaspeed’s chairwoman at conferences.
Megaspeed has not responded to BBC questions about its links, and those of Alice Huang, to China and the Chinese government.
The controversy has also placed Singapore’s diplomatic balancing act between Washington and Beijing under greater pressure.
Nanyang Technological University politics and international studies lecturer Dylan Loh said Singapore had long benefited from maintaining strong relations with both superpowers.
Prime Minister Lawrence Wong has repeatedly stressed that Singapore is neither pro-China nor pro-America, but “pro-Singapore”.
However, Loh said managing that position had become increasingly difficult amid the US-China dispute over semiconductor technology.
Singaporean political scientist Chong Ja Ian, a non-resident scholar with Carnegie China, said Beijing could question why Singapore was investigating matters involving American export restrictions, potentially viewing the move as siding with Washington.
At the same time, Washington could interpret Singapore’s latest statement as an attempt to shift responsibility onto the US, potentially triggering a backlash from the White House.
“Singapore has made a policy position not to take sides. But by not choosing a side, they run the risk of being seen as complicit” in either side’s agenda, Chong said.
Benjamin Ho, an assistant professor and China expert at Singapore’s S Rajaratnam School of International Studies, said the situation was not new for the city-state.
“This is the price that an open economy has to grapple with – you get caught in the middle when things turn sour,” he said.
