When U.S. lawmakers tightened export controls on advanced AI processors, their goal was straightforward enough: slow China’s access to cutting-edge compute hardware by restricting direct sales of the most capable GPUs. Three years later, the policy is colliding with the realities of globalized supply chains, reseller-driven distribution models, and explosive demand for AI accelerators.
Nothing has made that collision clearer than the scrutiny that Megapseed International is currently facing. Megaspeed — formerly 7Road International, a Chinese gaming company with ties to the state — describes itself as a “premier business partner of Nvidia” that specializes in AI computing resources.
The company has rapidly become Nvidia’s largest buyer in Southeast Asia, and U.S. officials and Singaporean authorities are examining whether Megaspeed acted as a conduit for restricted Nvidia AI chips ultimately destined for China. According to a special report by Bloomberg, the scale and speed of Megaspeed’s purchases, combined with gaps between its declared data center capacity and the volume of hardware imported, have raised questions about whether U.S. export controls are being circumvented through third-party jurisdictions.
While Nvidia has said it has found no evidence of chip diversion in the past, this latest episode concerning Megaspeed highlights the broader problem of export controls, which are stringent on paper but increasingly difficult to enforce in practice once hardware passes through layers of intermediaries.
Nvidia’s channel model complicates enforcement
Nvidia does not sell most of its data center GPUs directly to end users. Instead, it relies on a sprawling ecosystem of distributors, system integrators, cloud providers, and regional partners. This model scales efficiently in normal markets, but it complicates enforcement when export rules hinge on end use and final destination rather than the point of sale.
After the U.S. Commerce Department imposed controls on A100 and H100 GPUs in October 2022, Nvidia responded by creating lower-spec China-only variants such as the A800 and H800. When those too were restricted in late 2023, Nvidia introduced a new lineup of compliant parts, including the H20, L20, and L2. Each iteration was designed to remain below defined interconnect and performance thresholds while preserving software compatibility.
This approach allowed Nvidia to continue serving Chinese customers legally on paper; however, in practice, it also created a gray zone in which large volumes of AI hardware could be moved through third countries before regulators had clear visibility into where systems were deployed or how they were ultimately used. Once GPUs are installed in servers and shipped as complete systems, tracing individual accelerators becomes significantly harder.
Megaspeed managed to slot itself nicely within this gray zone. The company, which traces its roots to a Chinese gaming business that was subsequently spun out and rebranded in Singapore, reportedly committed to purchasing billions of dollars’ worth of Nvidia hardware over a short period. That drew attention, particularly when U.S. officials noticed discrepancies between the volume of chips imported and the capacity of Megaspeed’s disclosed data center footprint.
Singapore’s government has confirmed it is investigating potential export control violations, while U.S. agencies are examining whether restricted hardware was indirectly diverted to China.
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