Despite strict US export restrictions, advanced Nvidia AI chips continue to reach Chinese companies through indirect supply networks and overseas intermediaries. 

The issue has gained fresh attention following the controversy surrounding Nvidia CEO Jensen Huang and Singapore based cloud computing firm Megaspeed, raising questions about the effectiveness of Washington’s technology restrictions.

The US introduced these controls to prevent advanced processors from supporting China’s military capabilities and competing AI development. While some restrictions on Nvidia’s H200 chips have been eased under conditions, its latest Blackwell and Rubin processors remain restricted from exports to China.

One method involves using subsidiaries and front companies. Chinese companies facing US restrictions can access technology through newly established businesses that are not directly named on the US Entity List. Companies linked to Sugon and Inspur have reportedly used this approach.

Another route involves overseas data centres. Nvidia GPUs are installed in facilities across Singapore and Malaysia, where Chinese companies can rent computing capacity remotely without directly importing the restricted hardware.

Smuggling networks also dismantle graphics cards and transport their components separately. Some operators change product labels, use false shipping documents or describe restricted chips as ordinary electronic components. Human couriers carrying chips across borders have also been reported.

In March 2026, US prosecutors charged three individuals with allegedly diverting Nvidia powered servers worth billions of dollars to China through Southeast Asian intermediaries. Prosecutors said around $2.5 billion worth of servers were purchased from Super Micro between 2024 and 2025, with a substantial portion allegedly redirected to China.

Megaspeed has denied illegally diverting chips and says it is cooperating with US authorities. Meanwhile, Chinese AI companies are securing overseas computing capacity as traders stockpile restricted chips amid fears of tighter enforcement.

The growing challenge for Washington is to control not just direct chip exports, but also overseas data centres, cloud access and third party supply networks.

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