Jensen Huang controversy puts Southeast Asia’s AI chip trade under scrutiny

Chip and data-centre operators in Southeast Asia are bracing for tighter scrutiny after reports linking former Nvidia CEO Jensen Huang to a Chinese businesswoman suspected of spying for Beijing put Singapore and Malaysia in the spotlight, industry executives and analysts told Reuters.

The controversy has prompted US lawmakers from both parties to push for stronger restrictions on China’s access to advanced artificial intelligence chips and intensified scrutiny of Nvidia’s role in US national security.

Washington already restricts exports of Nvidia’s most advanced AI chips to China to protect US leadership in the sector. Lawmakers are now seeking to close a loophole that allows Chinese companies to rent computing power from overseas data centres and remotely access systems equipped with restricted chips.

Any tougher regulations could include new export controls and licensing requirements for shipments to Malaysia, Thailand, Indonesia and Singapore, the Wall Street Journal reported.

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Alice Huang, the businesswoman suspected of spying for China, previously worked as an executive at Singapore-based cloud-computing company Megaspeed. The company has subsidiaries in Thailand, Indonesia, Malaysia, Australia and the US.

Singapore authorities have been investigating Megaspeed since February last year over possible false declarations related to server purchases and other alleged offences.“After this case, every operator in the chain will be expected to know its end user. Southeast Asian operators will still get Nvidia chips, but proof of where every chip sits and who it serves is now part of the product,” Ke Yan, head of research at Singapore-based investment research firm Shenton Research, told Reuters.

A ‘post-DeepSeek moment’

Southeast Asia’s data-centre industry has grown rapidly as global technology companies expand their AI infrastructure.

Malaysia has approved 385.7 billion ringgit ($94.67 billion) of data-centre-related investment since 2021, according to the country’s trade ministry. Thailand had 42 data centres representing 3,400 megawatts of IT capacity and about 750 billion baht ($22.58 billion) of investment as of February, while Indonesia’s market was valued at $2.81 billion in 2025.

Gary Goh, CEO of Malaysia-based data-centre consultancy Sprint DC, described the prospect of tighter US rules as a “post-DeepSeek moment.”

“Once the new rules are out, there will be a lot more restrictions for countries like Malaysia. There could be a short- to medium-term market shock to the Malaysian data centre market,” Goh said.

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The AI boom has supported economic growth across the region. Singapore raised its annual growth forecast in August to between 4.5% and 5.5%, from 2% to 4%, citing the AI cycle. In Malaysia, an increase in data-centre projects helped the construction sector grow 6% in the third quarter of 2026.

The trade ministries of Singapore and Malaysia did not immediately respond to requests for comment.

Malaysia said Thursday that it was considering legislation that would allow the government to monitor data-centre operations, including the use of high-performance chips. Authorities said they needed to ensure that chips subject to US restrictions were imported for domestic use rather than re-exported.

An investor and CEO of an Asian neocloud company, who asked not to be identified, said he spent Friday morning consulting lawyers in the US.

“Everyone is still figuring out… Maybe every time you export something, there will be additional process to go through. We are worried about more scrutiny which will make it longer for chips to come through,” the CEO said.

Singapore said in February 2025 that entities operating in the country accounted for 22% of Nvidia’s chip sales, although only 1% of the chips physically entered Singapore. Authorities have also charged a fifth person in a case involving alleged AI-server fraud.

Region expected to withstand tighter rules

Some analysts said tighter controls were unlikely to derail the data-centre expansion in Singapore and Malaysia.

“Singapore itself will be more stringent; I think it’s a natural thing to happen. Singapore will tighten rules, and the US will tighten rules, but I don’t think this will harm Singapore’s and Malaysia’s prospects of buying chips,” Jarick Seet, head of small- and mid-cap equities at Maybank, told Reuters.

A senior executive at a Singapore chipmaker, who declined to be identified, said Huang’s departure could make it more difficult for Chinese companies to obtain US chips while potentially improving availability elsewhere.

“With Jensen out, the Chinese will have a harder time getting chips from the US. Maybe it is not a bad thing for the non-US people who will have more access to chips.”

The executive said companies could also redirect investment to Southeast Asia if Democratic electoral victories in data-centre-heavy US states such as Texas and Georgia slow the development of new facilities.

“Those companies are going to look elsewhere and likely come to countries that can offer them land and deals and power,” the executive said. “Even if we lose a chunk of the China business, I think we will get other companies coming looking for compute.”

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)