Taiwan IT Firms Accused of Smuggling High-End Nvidia AI Chips to China; Suspects Face Detention Over NT$75 Million in Illegal Profits

After the United States tightened restrictions on exports of advanced AI chips to China in April 2025, Nvidia CEO Jensen Huang said the company’s China compute business had fallen to zero. The flow of high-end GPUs has implications for the effectiveness of export controls and the credibility of Nvidia’s revenue disclosures, putting regulators’ and investors’ focus on whether Southeast Asia has become a transshipment hub.

Culper Research published a 40-page short report on May 13, 2026, and disclosed that it had taken a short position in Nvidia. It alleged that Chinese demand still drove more than 20% of Nvidia’s fiscal 2026 compute revenue. The report said Megaspeed’s balance sheet expanded from $33 million at the end of 2023 to $3 billion at the end of 2024, including $2.9 billion in refundable deposits of unexplained origin. It also questioned Megaspeed’s financial ties to Alibaba and whether Huang was aware of them.

The United States has restricted exports of advanced GPUs to China since October 2022. The Justice Department and the Commerce Department's Bureau of Industry and Security, or BIS, have since investigated shell companies, false end users and transshipments through third countries. High-end Nvidia chips and semiconductor design tools can be used for military AI, nuclear weapons simulations and surveillance systems. Efforts by China and Russia to evade controls through countries including Thailand and Malaysia have made corporate supply-chain screening a national security priority.

Encrypted messages made public on May 13, 2026, showed that Kelly and others had recruited partners since 2024 to transship Nvidia GPUs. In March, the Justice Department indicted three people, including Supermicro founder Yih-Shyan Liaw, alleging they routed $2.5 billion worth of servers through Southeast Asia. BIS imposed nearly $420 million in related penalties and forfeitures over the past 12 months and separately fined Applied Materials $252 million on February 12.