The Great Chip Shuffle:

How Nvidia’s AI Chips are Circumventing US Export Controls via Singapore

In the ever-evolving landscape of sanctions and export controls, enforcement agencies are facing an increasingly sophisticated game of cat and mouse. The latest front? The reexport of high-end Nvidia AI chips from Singapore to China, potentially violating stringent US export restrictions.

The Backstory

Nvidia’s AI chips—particularly the A100 and H100 models—have become a cornerstone for advanced computing, powering everything from deep learning to autonomous systems. Recognizing their strategic value, the US government imposed strict export controls in 2022 and 2023, preventing direct sales to China without explicit licenses.

However, recent investigations and parliamentary discussions have revealed a troubling trend: traders in Singapore may be acting as intermediaries, purchasing Nvidia chips under legitimate pretenses and then rerouting them to Chinese entities through third-party distributors, shell companies, and reexport hubs.

Singapore’s Role: A Strategic Gateway Under Scrutiny

Singapore, a major global trading hub, is known for its robust financial system, sophisticated logistics infrastructure, and free trade ethos. However, the city-state has come under heightened scrutiny after revelations that shipments of Nvidia chips may have been diverted through Singaporean entities.

• A US probe into Chinese AI firm DeepSeek’s possible circumvention of US export controls has cast Singapore in the spotlight.
• Nvidia’s financial filings revealed that 22% of its third-quarter revenue was billed to Singapore, making it the second-largest market after the US. However, Nvidia insists that these are “bill to” locations, not “ship to” addresses.
• Singaporean authorities launched an investigation following an anonymous tip-off about servers containing Nvidia chips being rerouted from Malaysia to undisclosed locations.
• Three men, including executives from Aperia Cloud Services, have been charged with fraud for allegedly misrepresenting the final destination of servers embedded with Nvidia chips.
• Singapore’s Ministry of Foreign Affairs (MFA) clarified that the country adheres strictly to multilateral export control regimes but does not enforce unilateral US export measures. However, it will take decisive action against deceptive practices.

Regulatory Repercussions and Crackdowns

The US administration had ramped up enforcement efforts, warning countries and businesses involved in unauthorized reexports of US-controlled technologies. Meanwhile, Singapore’s authorities have contacted Malaysia and the US to coordinate investigations and ensure compliance.

Singapore’s Home Affairs and Law Minister K. Shanmugam has stated that Singapore will not tolerate false representations regarding the final destination of goods. Offenders face up to 20 years in prison and significant fines.

Implications for Compliance Professionals

For sanctions and export control specialists, the Singapore-to-China Nvidia chip trade serves as a case study in regulatory risk. Here’s what professionals should keep in mind:

• Know Your Supply Chain: Companies must conduct enhanced due diligence (EDD) on their buyers, ensuring they are not indirectly supplying restricted entities.
• Monitor Red Flags: High-volume purchases of restricted chips, payments from third-party locations, and entities with unclear business models should raise concerns.
• Strengthen Compliance Programs: Firms should adopt robust end-use verification practices and ensure they align with both US and Singaporean export laws.
• Leverage Technology: AI-driven trade surveillance tools can help identify risky transactions before they occur.

Learn from the Experts: ACSS and the CXS Certification

The Association of Certified Sanctions Specialists (ACSS) has been at the forefront of training compliance professionals to tackle emerging risks in sanctions and export controls. As enforcement efforts intensify, professionals must equip themselves with the right expertise. The Certified Export Controls Specialist (CXS) certification, newly launched by ACSS, provides a structured program to understand export control laws, dual-use goods classification, and circumvention risks.

Looking Ahead

As demand for AI chips continues to soar, enforcement agencies must adapt to increasingly creative methods of sanctions evasion. Meanwhile, businesses must stay ahead of regulatory expectations, ensuring compliance is not just a box-ticking exercise but an integral part of their risk management strategy.

For now, Nvidia’s AI chips remain at the center of a geopolitical chess match, with Singapore playing a pivotal role. The question remains—how long before regulators make their next move?