Covert Compute
Despite years of Western export controls, restricted NVIDIA AI chips continue to reach China. New C4ADS analysis maps those active pathways, including university acquisitions, Southeast Asian transshipment, and the corporate ownership structure behind a $4.6B chip importer already under U.S. scrutiny.
Executive Summary #
Advanced graphics processing units (GPUs) are the hardware foundation of modern artificial intelligence (AI). States have an interest in maintaining a lead in developing and accessing the most powerful classes of chips to gain a geopolitical and technological advantage over other countries. Since 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has used export controls to limit access for some countries, including China, to advanced semiconductor chips that are produced with U.S. inputs and technology. However, China has demonstrated a sustained and adaptive ability to acquire restricted U.S.-designed chips, exploiting gaps in jurisdictional coordination and enforcement regimes.
Using Chinese government records, Southeast Asian trade data, and corporate data, C4ADS identified and analyzed three pathways through which restricted NVIDIA chips likely reach Chinese end users:
- Direct Acquisition by Universities and Research Institutions: Between July 2025 and January 2026, Chinese universities and research institutions procured at least 56 restricted NVIDIA chips worth US$1.7 million. These chips were bundled inside multimillion-dollar contracts and routed through uncredentialed companies. Most of the buyer institutions maintain ties to the Chinese government and China’s defense industrial base.
- Diversion and/or Transshipment through Southeast Asian Trade Networks: C4ADS identified 50 export shipments of restricted NVIDIA GPUs diverted through Vietnam, India, and Malaysia to Hong Kong and China between 2023 and 2025, totaling approximately US$13.4 million and showing a consistent pattern of chip movement.
- Opaque Corporate Ownership Structures: Megaspeed International Pte. Ltd., reported by Bloomberg and The New York Times to be the largest Southeast Asian importer of NVIDIA hardware, with a total of US$4.6 billion in imports from 2022 to 2025, has a web of ultimate beneficial owners that may have ties to the People’s Republic of China (PRC).
These findings almost certainly understate the true volume of diverted chips. The analysis covers a six-month window of government records, and tallies only chips explicitly mentioned in available documents and trade data. That such cases surface in open-source records at all indicates the problem extends beyond what public documentation captures. Closing the enforcement gap will require sustained coordination between BIS and regional partners, meaningful post-sale end-user verification, and private sector compliance treated as an ongoing obligation.
