The U.S. Commerce Department's investigation into Singapore data center company Megaspeed over suspected smuggling of Nvidia artificial intelligence chips to China was abruptly transferred to the Justice Department after Nvidia's general counsel intervened, according to The New York Times and Bloomberg. A Bloomberg analysis of trade records found that Nvidia underreported roughly 50,000 chips to the Commerce Department's Bureau of Industry and Security (BIS), worth billions of dollars. The episode has raised concerns about enforcement of chip export controls and the accuracy of corporate disclosures.
Investigation Suddenly Transferred
The New York Times reported that Commerce Department investigators had been probing Megaspeed for months when their work came to a sudden halt late last year. The investigation centered on Megaspeed, a data center company led by an executive U.S. officials now believe is a Chinese spy and who has ties to Nvidia CEO Jensen Huang. The case was abruptly transferred to the Justice Department after Commerce investigators received an email from Nvidia general counsel Tim Teter seeking information about the Megaspeed investigation.
Commerce agents communicating with company representatives during a case is not unusual, but the content of this information was, the report said. Teter said senior Commerce official Jeff Kessler had allowed Nvidia to make contact on the matter. Agents were stunned that Nvidia mentioned Kessler — their superior, nominated to the post by President Trump. According to current and former government officials and other people familiar with the matter, some believed Kessler's interactions with Nvidia violated government procedure and could taint the case.
Questions Over Chip Counts
Bloomberg reported that in the months after Teter's initial call with Kessler, Nvidia gave BIS an incomplete account of its business with Megaspeed. After visiting 12 Megaspeed data center facilities owned by eight companies across three countries in Southeast Asia, Nvidia sent inventory checks to the agency and declared to Bloomberg News in mid-November 2025 that everything was fine. The company also said at the time that it had asked the U.S. government whether it needed to cut ties with Megaspeed and was told it did not.
But according to trade records analyzed by Bloomberg, the figures Nvidia submitted to the U.S. government underreported the number of chips it sold to Megaspeed through hardware partners by 50,000. Pressed on the gap, Nvidia told Bloomberg in December 2025 that it had checked other Megaspeed warehouses where the missing hardware was stored, but declined to say how many chips were specifically found at those facilities and provided no further details.
| Key Figures | Details |
|---|---|
| Chips underreported | Approximately 50,000 |
| Value involved | Billions of dollars |
| Facilities investigated | 12 data centers owned by 8 companies in 3 Southeast Asian countries |
| Nvidia response timing | November and December 2025 |
Reactions and What to Watch
The New York Times said Nvidia's general counsel writing to the Commerce Department unsettled investigators, with some officials believing Kessler's interactions could affect the fairness of the case. Bloomberg noted that Nvidia's underreporting involved billions of dollars in value and that the company's subsequent explanations lacked transparency. The Justice Department has taken over the case but has not disclosed the status of its investigation.
The episode highlights corporate compliance problems in U.S. chip export control enforcement and the disputed boundaries of interaction between corporate giants and regulators.
Questions to watch include whether the Justice Department investigation moves forward, whether Nvidia faces further scrutiny, and whether internal Commerce Department procedures were followed.