It has been reported that the U.S. Department of Commerce's investigation into semiconductor smuggling allegations against Megaspeed, a Singaporean company where Nvidia CEO Jensen Huang's affair partner previously served as a high-ranking executive, was halted after Nvidia contacted him.
The case has been transferred to the U.S. Department of Justice and a criminal investigation is underway, but suspicions are being raised that Nvidia may have exerted undue influence on the investigation through contact with high-ranking officials at the Department of Commerce.
The New York Times (NYT), citing current and former U.S. government officials and sources familiar with the case, reported on the 9th (local time) that the Department of Commerce suspended the investigation after contacting Nvidia while conducting an investigation into Singapore data center company Megaspeed last year.
Alice Hwang, a former high-ranking executive at Megaspeed, has been under surveillance by U.S. intelligence authorities on suspicion of attempting to collect advanced artificial intelligence (AI) semiconductor secrets and U.S. administration trends by approaching CEO Hwang.
The U.S. government began investigating the company and Alice Huang in 2024 after Megaspeed began importing billions of dollars worth of Nvidia's advanced AI equipment into Malaysia.
Megaspeed has been building data centers in Southeast Asia for Chinese customers such as Alibaba, and U.S. authorities have suspected that some NVIDIA semiconductors may have been illegally imported into China in violation of U.S. export control measures during this process.
Investigators from the Department of Commerce's Bureau of Industry and Security (BIS) had been investigating the case for several months, but the situation changed dramatically after receiving an email from Tim Teter, Nvidia's general counsel, in August of last year.
Counsel Teter requested an interview with the investigator, saying he had permission from Deputy Secretary of Commerce Jeffrey Kessler. When the investigator refused, Deputy Secretary Kessler said he could communicate with BIS employees, but he responded that he did not know what the problem was.
Investigators expressed concern that Nvidia had mentioned the name of its superior, Deputy Secretary Kessler.
Nvidia, too, was not excluded from a potential investigation, and it was determined that contact with high-ranking officials from the Department of Commerce could have an unfair influence on the investigation.
When investigators forwarded the related email to Deputy Minister Kessler, he responded a few hours later telling him to handle the case strictly according to regulations.
A Commerce Department official explained that Deputy Secretary Kessler was not directly involved in whether investigators provided information or interviewed them.
Afterwards, officials from the Ministry of Commerce held a meeting to discuss the issue and reported related details to other investigative agencies.
When the Ministry of Justice requested a halt to the investigation, the Department of Commerce responded, and the case was transferred to the Ministry of Justice, where a criminal investigation is currently underway.
It is unclear whether other factors contributed to the suspension of the Commerce Department's investigation.
However, the NYT reported that authorities evaluated the method of transferring the case as unusual and worrisome, and that this may have resulted in a missed opportunity to block the supply of advanced semiconductors to Megaspeed early.
Meanwhile, it is reported that President Donald Trump was reported in October of last year about the relationship between CEO Hwang and Alice Hwang and Alice Hwang's suspicions of being a Chinese spy, but did not take any action.
Other U.S. government agencies proposed placing Megaspeed on a restricted trade list subject to export controls, but the Commerce Department did not implement the plan.
The Commerce Department has not added any new companies to the restricted trading list for more than a year, the longest gap in the past 18 years.
The Commerce Department said it handled the incident in accordance with regulations, and Nvidia explained that its contact with government officials was to provide information and request guidance.
Megaspeed claimed that it was conducting its own investigation into allegations of illegal diversion of semiconductors, and that it had expressed its intention to cooperate with the U.S. government several times, but had not received a response.
