Summary

  • Bloomberg reported that an investigation by the U.S. Commerce Department's Bureau of Industry and Security into suspected smuggling of artificial intelligence (AI) semiconductors was constrained after Nvidia contacted the agency.
  • Nvidia said it had addressed questions surrounding roughly 50,000 missing chips tied to Megaspeed, but Bloomberg said the probe did not advance after the U.S. Department of Justice asked for the investigation to be halted.
  • Nvidia said it had stopped doing business with Megaspeed, but Bloomberg reported that Megaspeed still appears on Nvidia's official cloud partner list, leaving continued questions over the U.S. investigation and the company's response.

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Bloomberg reported that a U.S. investigation into suspected smuggling of Nvidia artificial intelligence chips was constrained after the company contacted government officials.

According to Bloomberg on November 9, Nvidia General Counsel Tim Teter contacted Jeffrey Kessler, the U.S. Commerce undersecretary who oversees the Bureau of Industry and Security, in late summer last year to ask about the status of an investigation into Singapore-based Megaspeed International. Megaspeed was under investigation at the time for allegedly violating U.S. curbs on semiconductor exports to China.

Bloomberg said Teter was also trying to determine whether BIS was involved in actions by Singaporean authorities to question Megaspeed executive Alice Huang and bar her from leaving the country. BIS was not involved in those measures, the report said. Huang has also come under scrutiny in an Nvidia board investigation after details emerged of an affair with Nvidia Chief Executive Officer Jensen Huang.

After Teter's outreach, BIS placed unusual internal restrictions on work related to the Megaspeed case. Staff were told to route inquiries involving Nvidia through Kessler or obtain prior approval, and were instructed not to mention Megaspeed or its Malaysian subsidiary Speedmatrix in communications outside the agency, Bloomberg reported.

Teter also contacted BIS staff directly to request meetings. It remains unclear whether those contacts affected the limits placed on the investigation. Bloomberg said the U.S. Department of Justice later asked BIS to halt the probe late last year, and the investigation did not advance despite sufficient evidence having been secured.

Questions were also raised about the accuracy of materials Nvidia submitted to U.S. authorities regarding Megaspeed. Nvidia said in November last year that the semiconductors in question were being properly stored. But Bloomberg's analysis of trade records found that roughly 50,000 chips sold through a hardware partner were missing from the tally. Nvidia later said it located the equipment at an additional warehouse.

Nvidia said its contacts with government officials were part of standard procedures to provide information needed for the investigation and confirm guidance. BIS said it handles all law-enforcement matters, including semiconductor smuggling, strictly in accordance with regulations. Megaspeed denied all allegations of chip smuggling and said the related investigation in Singapore ended without sanctions.

Nvidia has also said it stopped doing business with Megaspeed. Bloomberg reported, however, that Megaspeed still appears on Nvidia's list of official cloud partners. Questions continue over how U.S. authorities handled the probe and how Nvidia responded.

Suehyeon Lee