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Commerce paused a chip-smuggling probe after Nvidia contacted investigators

Commerce paused a chip-smuggling probe after Nvidia contacted investigators

Rule Changes

The Megaspeed case moved to the Justice Department, which is running a criminal inquiry into the Singapore data-center company.

Today: Report links Nvidia contact to halted probe

Overview

Updated 1 hour ago

A U.S. investigation into whether Nvidia AI chips were being smuggled to China through Singapore stopped moving at the Commerce Department in late 2025. The pause followed contact from Nvidia's general counsel to the agency that oversees chip export controls.

The case moved to the Justice Department, which is running a criminal inquiry into Megaspeed, the data-center company at the center. Nvidia says it was answering questions and helping enforcement. The New York Times reported that current and former officials saw the contact as a possible violation of government procedure.

Why it matters

The case tests whether the U.S. can police AI-chip smuggling when the company whose chips are under scrutiny can call the regulator overseeing the case.

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Key Indicators

50,000
Nvidia chips missing from initial Megaspeed tally
Bloomberg found Nvidia undercounted chips sold through hardware partners by this amount.
17,544
GB300 processors imported by Megaspeed
Malaysian trade records show 17,544 processors imported in November 2025.
$787M
Value of those GB300 imports
The November 2025 shipment was worth about $787 million, according to trade records.
12
Data-center facilities Nvidia said it visited
Nvidia told BIS it checked facilities across three countries.

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People Involved

Jensen Huang
Jensen Huang
Nvidia co-founder and chief executive
Under board investigation after admitting an affair with a Megaspeed executive
TT
Tim Teter
Nvidia general counsel
Central figure in the Commerce Department contact
 Jeffrey Kessler
Jeffrey Kessler
Commerce under secretary overseeing the Bureau of Industry and Security
Named in the report on Nvidia's contact with investigators
 Alice Huang
Alice Huang
Megaspeed executive
Named in the U.S. criminal inquiry; not reachable by Bloomberg
 Howard Lutnick
Howard Lutnick
U.S. Commerce Secretary
Kessler reports directly to him

Organizations Involved

Nvidia Corporation
Nvidia Corporation
Semiconductor company
Under scrutiny over its Megaspeed dealings; says it cooperates with government

Nvidia designs the AI chips at the center of the Megaspeed smuggling inquiry.
Commerce Department Bureau of Industry and Security
Commerce Department Bureau of Industry and Security
Federal Agency
Paused its Megaspeed probe at the Justice Department's request

The Commerce Department's Bureau of Industry and Security enforces U.S. export controls on advanced chips.
U.S. Department of Justice
U.S. Department of Justice
Federal agency
Running a criminal inquiry into Megaspeed

The Justice Department is running the criminal inquiry into Megaspeed after Commerce paused its case.
Megaspeed
Megaspeed
Data-center company
Denies chip diversion; remains an Nvidia Cloud Partner

Singapore-based data-center company suspected of diverting Nvidia AI chips into China.

Timeline

2025 November 2026

9 events Latest: Today
Tap a bar to jump to that date

  1. Report links Nvidia contact to halted probe

    Today Revelation

    The New York Times links Nvidia's contact to the halted Commerce probe.

  2. Jensen Huang admits affair with Megaspeed executive

    Statement

    Jensen Huang admits affair with Alice Huang; Nvidia's board investigates.

  3. Nvidia acknowledges 50,000-chip gap

    Correction

    After Bloomberg presses, Nvidia says it checked more warehouses but gives no details.

  4. Megaspeed imports $787 million in Nvidia chips

    Trade

    Malaysian records show 17,544 GB300 processors imported in November 2025.

  5. Nvidia says inventory checks found hardware in place

    Statement

    Nvidia says visits to 12 facilities found hardware where it should be.

  6. Megaspeed scrutiny becomes public

    Report

    The New York Times first reports U.S. scrutiny of Megaspeed.

  7. Nvidia general counsel calls Commerce official

    Inquiry

    Tim Teter asks Jeffrey Kessler whether BIS helped detain Alice Huang in Singapore.

  8. BIS tightens handling of Nvidia requests

    Policy

    Staff must route all Nvidia requests through Kessler and avoid mentioning Megaspeed externally.

  9. DOJ asks BIS to pause Megaspeed probe

    Legal

    Federal prosecutors take over the case and open a criminal inquiry.

Scenarios

1

DOJ indicts Megaspeed or its executives

Possible Resolves by Q2 2027

Discussed by: The New York Times and Bloomberg, citing people familiar with the criminal inquiry

Federal prosecutors are already running a criminal inquiry into Megaspeed. If they conclude the company or its executives diverted Nvidia chips to China, an indictment would move the case from regulatory scrutiny to a courtroom test of export-control law.

2

DOJ closes the Megaspeed inquiry without charges

Possible Resolves by Q2 2027

Discussed by: Bloomberg and The New York Times, which report the criminal inquiry is ongoing

Prosecutors could decide the evidence does not support charges, or that the diplomatic and market costs of pursuing Nvidia's partner are too high. That would leave the export-control questions unresolved and likely return attention to Congress and BIS.

3

BIS adds Megaspeed to the Entity List

Possible Resolves by Q1 2027

Discussed by: Bloomberg, which reported BIS has declined to impose restrictions despite calls from senior Trump administration officials

The Bureau of Industry and Security can restrict a company's access to U.S. technology by adding it to the Entity List. BIS has so far declined to act against Megaspeed, but the report's revelations could increase pressure to do so.

4

Congress passes Nvidia-specific export-control limits

Unlikely Resolves by End of 2027

Discussed by: Politico, which reported the revelations are set to energize Capitol Hill efforts to restrict Nvidia's exports to China

Lawmakers have already been pushing to tighten AI-chip export rules. The Megaspeed report could give those efforts more momentum, but passing a bill would still require majorities in both chambers and the president's signature.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

1987

Toshiba-Kongsberg scandal (1987)

Toshiba Machine sold advanced milling machines to the Soviet Union through Norwegian partner Kongsberg, violating Cold War export rules. U.S. lawmakers denounced the deal, and Toshiba's chairman resigned. The U.S. imposed sanctions on the company.

Then

Toshiba Machine faced sanctions and leadership changes; the scandal became a political flashpoint in Washington.

Now

The case showed that export-control violations by allied companies could trigger congressional backlash and reshape corporate behavior.

Why this matters now

Megaspeed is accused of a similar kind of diversion, and the Nvidia contact has drawn comparable scrutiny from Washington.

2016-2018

ZTE export-control case (2016-2018)

The Commerce Department placed Chinese telecom equipment maker ZTE on its Entity List, which restricts companies from buying U.S. technology, for shipping goods to Iran and North Korea. ZTE paid penalties, replaced its leadership, and eventually won removal from the list.

Then

ZTE's access to U.S. chips was cut off, briefly halting major operations.

Now

The case established BIS restrictions as one of the most powerful tools in U.S. tech policy.

Why this matters now

The Megaspeed inquiry tests whether BIS will use the same tool against a company tied to Nvidia.

Sources

(8)
+2
Slashdot NBC News The Business Times TNW The Philadelphia Inquirer Seeking Alpha Bloomberg Politico