Nvidia's legal counsel contacted investigators during semiconductor smuggling probe

Investigators alarmed after undersecretary's name invoked; case transferred to Justice Dept.

Nvidia CEO Jensen Huang speaks on stage at the Invest in Germany Summit in Berlin on Oct. 19 (local time). [Reuters]
Nvidia CEO Jensen Huang speaks on stage at the Invest in Germany Summit in Berlin on Oct. 19 (local time). [Reuters]

The US Commerce Department investigated Singapore-based data center firm Megaspeed — where a woman alleged to have had an affair with Nvidia CEO Jensen Huang once served as a senior executive — over suspected semiconductor smuggling, but halted the probe after Nvidia made contact with department officials. The case has since been transferred to the Justice Department for a criminal investigation, but questions are mounting over whether Nvidia improperly influenced the Commerce Department probe through contact with a senior official.

The New York Times reported Monday (local time), citing current and former US government officials and sources familiar with the matter, that the Commerce Department dropped its investigation into Megaspeed last year after Nvidia reached out to department officials.

Alice Huang, a former senior executive at Megaspeed, had been under surveillance by US intelligence agencies on suspicion of approaching Huang to gather classified information on advanced AI semiconductors and monitor developments within the administration. The US government opened an investigation into Megaspeed and Alice Huang in 2024 after the company began shipping billions of dollars' worth of Nvidia's advanced AI equipment into Malaysia.

Megaspeed has been building data centers across Southeast Asia for Chinese customers, including Alibaba. US authorities suspected that some Nvidia semiconductors may have been illegally diverted to China in the process, in violation of American export controls.

Investigators at the Commerce Department's Bureau of Industry and Security conducted the probe for several months, but the situation changed abruptly in August last year after they received an email from Nvidia's legal counsel, Tim Teter.

Teter said he had received permission from Commerce Department Undersecretary Jeffrey Kessler and requested a meeting with the investigators. When they declined, he replied that he did not understand the problem, given that Kessler had said Nvidia could communicate with BIS staff.

The investigators expressed concern that Nvidia had invoked the name of their superior, Kessler. They concluded that contact between Nvidia — which had not been ruled out as a potential subject of the investigation — and a senior Commerce Department official could improperly influence the probe.

When the investigators forwarded the email to Kessler, he responded within hours, instructing them to handle the case strictly in accordance with regulations.

A Commerce Department official said Kessler had not been directly involved in deciding whether investigators would share information or grant interviews.

Commerce Department officials subsequently held a meeting to discuss the matter and notified other investigative agencies. When the Justice Department asked the Commerce Department to stand down, it complied, and the case was transferred to the Justice Department, where a criminal investigation is now underway.

It remains unclear whether other factors contributed to the Commerce Department's decision to halt its probe. However, The New York Times said officials described the manner in which the case was transferred as unusual and troubling, and noted that the move may have cost authorities an early opportunity to cut off advanced semiconductor supplies to Megaspeed.

Meanwhile, President Donald Trump was briefed in October last year on the relationship between Huang and Alice Huang, as well as allegations that Alice Huang was a Chinese spy, but took no action, according to reports. Other US government agencies proposed adding Megaspeed to the export control entity list, but the Commerce Department did not act on the recommendation.

The Commerce Department has not added any new companies to the entity list in more than a year — the longest such gap in the past 18 years. The department said it handled the matter in accordance with its regulations, while Nvidia said its contacts with government officials were for the purpose of providing information and seeking guidance.

Megaspeed said it is conducting its own internal investigation into the alleged diversion of semiconductors and has repeatedly offered to cooperate with the US government but has not received a response.


yckim6452@heraldcorp.com