The biggest loophole in NVIDIA's China chip controls: not selling chips, but renting them to you
Megaspeed spent $4.6 billion on NVIDIA chips to sublease to Alibaba, and remote access breaks no law; after NVIDIA's own audit, 50,000 chips remain unaccounted for, some of them the most advanced Blackwell.
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Megaspeed assembled $4.6 billion in NVIDIA chips through an intricate shell company structure
Megaspeed is Southeast Asia's largest NVIDIA chip buyer and Alibaba's primary compute supplier. It was spun off from a Chinese gaming company, went through a BVI shell company, registered in Singapore, and became an official NVIDIA partner four days later. The company has been under investigation by the US and Singapore for at least a year. According to reporter Mackenzie Hawkins, it is 100% owned by Singaporeans, but its structure is essentially that of a shell company, and the source of its funding remains an unresolved question.
— Mackenzie HawkinsAfter its own audit, NVIDIA still cannot account for 50,000 chips
At the US government's request, NVIDIA tallied the chips Megaspeed had received across three countries, eight companies, and over a dozen data centers. In November 2024, it stated publicly that ‘all shipments to our partners are where they should be.’ But after cross-checking with trade records from Malaysia and Indonesia, the reporter found roughly 50,000 chips unaccounted for, most of them NVIDIA's then-best hardware, Blackwell. NVIDIA later found another batch of previously undisclosed warehouses but has consistently refused to confirm the exact numbers. In December it only vaguely said it had found ‘essentially all’ of the chips, promising further audits—but when the reporter pressed for details more than a dozen times afterward, NVIDIA provided no answers.
— Mackenzie HawkinsMegaspeed presented a Shanghai project as an unnamed third country data center to investors
Megaspeed's website lists three data centers, but its 2024 pitch to investors described five, spanning three countries, one located in ‘an unnamed third country’—yet the rendering shown was for a Shanghai project under construction. This was precisely where Megaspeed's ‘corporate twin’ company in China was hiring engineers to use restricted NVIDIA hardware, and the investors behind it have long-standing business dealings with Alice (the executive caught up in Jensen Huang's affair). The company has offered no explanation.
— Mackenzie HawkinsRenting NVIDIA chips to Chinese AI companies is legal in nine of ten cases
So long as the data center sits in Southeast Asia, and you remotely rent computing power to cutting-edge Chinese AI companies—even for training the most advanced open-source models—it is legal in the overwhelming majority of cases. The one exception is knowing that the compute will be used by a foreign adversary's military or intelligence service. In its final days, the Biden administration issued a global restriction scheme called the AI diffusion rule in an attempt to close this loophole, originally set to take effect in May 2025, but the Trump administration has not enforced it. Morgan Stanley and others call it a ‘loophole in export controls,’ but legally speaking, it is merely the US government's own policy choice, not a loophole.
— Mackenzie HawkinsNVIDIA's general counsel called export control enforcement directly about the investigation
NVIDIA's general counsel Tim Teeter called the head of BIS, the export control enforcement agency, directly in late summer last year, asking whether they had been involved in the investigation into Alice's detention in Singapore—NVIDIA claimed Teeter didn't know at the time that she was Jensen Huang's extramarital partner. Thereafter, if investigators wanted information from NVIDIA, they had to first get approval from or route it through Jeffrey Kessler, a special privilege no other major tech company has enjoyed. This weakened the agency's investigative capability, and ultimately BIS handed the case to DOJ, the Department of Justice.
— Mackenzie HawkinsDeepSeek ordered 160,000 Huawei chips but must wait over a year for delivery
DeepSeek placed a large order for 160,000 of Huawei's best AI chips, the 950DT, for the next-generation hyperscale compute cluster it is building in Inner Mongolia—though the US government believes DeepSeek installed NVIDIA's Blackwell chips at this same location. Huawei simply does not have the capacity to deliver this order within a year, and DeepSeek has even lobbied China's government to press Huawei to accelerate delivery. The 950DT was designed by Huawei for training; DeepSeek plans to use it for inference first, not training.
— Mackenzie HawkinsHuawei exported its best chips to Egypt using its old telecom playbook
Huawei bid on a tender with Egypt's government to provide AI computing power to Egyptian defense-related enterprises—a small volume, about 2,000 chips, yet Huawei deployed its best hardware. With capacity so tight, every chip exported has to be squeezed out of domestic allocation. After spotting this, the US government hastily convened a consortium of American companies to counter-bid, since almost no one has previously treated Egypt as a key market. This is seen as the same playbook Huawei used to dominate 3G and 4G telecom equipment globally, and the US is trying to prevent history from repeating.
— Mackenzie HawkinsIn their own words · checked verbatim
The stated location of where the chips are going to wind up was not the intended location.
Mackenzie Hawkins11:19
they declared restricted NVIDIA hardware to be, quote unquote, adapter modules. This is a category of electronics that includes the thing you use to plug your phone into a foreign power outlet.
Mackenzie Hawkins13:24
We're talking about a significant proportion of the overall hardware that Megaspeed has purchased.
Mackenzie Hawkins16:39
this is sort of the central tension that has been playing out over the past year is whose job is it to know?
Mackenzie Hawkins20:45
That's a policy that's unique to NVIDIA. It's not how things operate with any other major tech company.
Mackenzie Hawkins34:15
that legal loophole of Chinese companies being able to rent GPUs via Southeast Asia, even if they can't actually buy certain chips, that comes under scrutiny
Joe Wiesenthal48:35
Figures
| Megaspeed's cumulative NVIDIA hardware purchases | $4.6 billion | 4:07 |
| Chips in Huawei's Egypt tender bid | approximately 2,000 | 41:23 |
| US overseas export control enforcement officials | approximately 12 people, planned to expand to 25 | 7:18 |
| Hardware sales by Supermicro co-founder to Southeast Asia intermediaries | $2.5 billion | 20:45 |
Glossary
- NVIDIA Cloud Partner (NCP)
- NVIDIA-certified top-tier cloud computing partner status; Megaspeed holds this designation.
- AI diffusion rule
- A global NVIDIA chip export licensing system issued in the Biden administration's final days, which the Trump administration has not enforced.
- remote access
- Chinese companies accessing NVIDIA computing power by leasing overseas data centers rather than buying chips outright.
- zero-day inferencing
- Optimizing inference for Huawei's chips on the day a model launches, rather than completing pretraining on them.
How to listen
Investors, compliance professionals and tech journalists tracking US-China tech decoupling, chip export controls, and Southeast Asia data center business.