Authorities in Singapore have arrested three men suspected of smuggling Nvidia chips by misrepresenting the destination of U.S. manufactured servers. The arrests, reported by Channel News Asia, involved two Singaporean citizens and one Chinese national charged with fraud over a shipment of servers.

Singapore is now investigating whether these servers produced by Dell and Supermicro contained Nvidia’s restricted chips and were rerouted from their intended destination of Malaysia. Bloomberg highlighted concerns about whether Malaysia was truly the final stop or part of a broader network to funnel high-powered AI chips elsewhere.

The focus has intensified due to Nvidia's growing presence in Singapore. According to Nvidia’s latest annual report, Singapore accounted for 18% of its fiscal year 2025 revenue, roughly $24 billion based on "customer billing location." However, only 2% of products, valued at approximately $473 million, were physically shipped to the country. This discrepancy has raised questions about whether Singapore is being used as a strategic invoicing hub while products are shipped elsewhere.

Nvidia has not provided comments regarding the arrests. Dell, however, emphasized its strict trade compliance program and confirmed it investigates customers violating regulations. Supermicro has yet to respond.

This case has reignited concerns over how Nvidia’s advanced AI chips might be making their way into China, despite strict U.S. export controls. The spotlight on Singapore grew brighter after China’s DeepSeek AI model gained global attention earlier this year, with reports revealing its reliance on Nvidia's GPUs despite bans designed to limit China's access to cutting-edge technology.

Following the arrests, Nvidia shares dropped nearly 8% on Monday, marking a 14% decline this year and pushing its market value below $3 trillion. Dell and Supermicro stocks also suffered losses, with drops of 6% and 11%, respectively.

The wider implications of this case extend beyond Singapore. Analysts at Mizuho warn that a more comprehensive ban on Nvidia chip exports to China could cut Nvidia’s revenue by $4 billion to $5 billion this fiscal year.

As AI rivalry between the U.S. and China intensifies, Singapore's latest arrests show that efforts to control the flow of advanced technology remain complex. While digital borders tighten, networks smuggling AI chips seem to be evolving, keeping the battle for technological dominance alive.

PHOTO: MNC MEDIA/IST

This article was created with AI assistance.