Nvidia Faces Twin Smuggling Scandals and a Congressional Grilling

Two investigations spanning roughly $7.3 billion in Nvidia chip flows — $2.5 billion through Supermicro and more than $4.8 billion through Megaspeed — have converged on one question Nvidia has dodged for over a year: where do its chips actually end up? For more than a year, CEO Jensen Huang has asserted there is no evidence Nvidia AI chips are being diverted to China. That claim now rests on shakier ground than at any point since export controls tightened.

Both scandals allegedly ran through Southeast Asia. In March, federal prosecutors charged Supermicro co-founder Yih-Shyan "Wally" Liaw and two others with routing about $2.5 billion in servers carrying Nvidia H200 and B200 GPUs to China via a front company. Separately, U.S. authorities are investigating Megaspeed, Nvidia's largest Southeast Asian customer, over suspected chip diversion. No evidence has emerged that the two cases connect directly, though industry observers have flagged potential overlap.

What did the board learn, and when?

On Sunday, Huang told employees in an email that he had betrayed his wife and family in an extramarital affair. Reports followed claiming intelligence officials believe his affair partner, Alice Huang (no relation), was recruited by China's Ministry of State Security to report on his doings to Beijing. She is a former executive of Megaspeed International, the Singapore company that reportedly became Nvidia's largest chip buyer in the region.

Nvidia's board has opened an independent investigation into whether Huang was the target of a foreign intelligence operation. The board said Tuesday it retained Joon H. Kim, acting U.S. Attorney for the Southern District of New York, and his firm Wachtell, Lipton, Rosen & Katz to lead it. Board members maintain "confidence" in Huang and said they have no reason to believe "either national security or Nvidia secrets were compromised." A caveat belongs here: the board is investigating its own CEO, and its assurance covers what it knows today, not what Kim may find.

What does the Supermicro case allege?

The Liaw indictment describes an elaborate deception. Contractors staged thousands of nonworking dummy servers across three warehouses to fool auditors and used hair dryers to soften adhesive before peeling off serial-number labels. Liaw has pleaded not guilty; one of the three charged pleaded guilty last month. Supermicro was not charged and says it cooperated as a victim.

The indictment does not accuse Nvidia of wrongdoing. It does, however, show how the front company's orders fed Nvidia's chip allocation. In December 2024, Liaw allegedly requested monthly forecasts, writing they were "the only way" to secure Nvidia B200 allocations. Bloomberg later reported, and Culper Research agreed, that the front company is OBON, a Bangkok AI infrastructure firm. OBON has not been charged.

The pattern is not new. Supermicro pleaded guilty in 2006 to illegally exporting equipment to Iran through a Dubai distributor — the same neighbor-country structure.

What does Megaspeed change?

According to New York Times reporting, Megaspeed bought more than $4.8 billion in Nvidia chips over two years, with nearly $2 billion installed in Malaysian and Indonesian data centers alleged to serve Chinese customers remotely. Megaspeed has denied wrongdoing.

Nvidia's own assurances have aged poorly. In October 2025, a spokesperson said Nvidia had visited Megaspeed operations and found no evidence of diversion. Last month, Nvidia called the allegations "thoroughly investigated and debunked." Huang told Bloomberg his interactions with Alice Huang were "completely normal and not unusual." Each statement predates the espionage reports; none has been retracted.

Culper Research, which has shorted Nvidia, argued in May that the Supermicro and Megaspeed threads connect: Megaspeed's website once listed Supermicro as a partner alongside Nvidia, Intel, and Gigabyte. The entry was removed, but Culper found it still sits in the site code.

What comes next?

Congress moves in November. Three House committee chairs have asked Huang to appear at a closed-door briefing on November 18, one day after Nvidia reports third-quarter results. Senator Elizabeth Warren, whose June letter to general counsel Tim Teter and audit chair Brooke Seawell questioned Nvidia's compliance program, is poised to chair the Senate Banking Committee in January, with subpoena power expected to follow. She and Senator Jim Banks called Monday for Nvidia to answer questions.

An export-control veteran, speaking anonymously, said any serious review would ask whether the company has a broader vulnerability — not just at the CEO level — noting the March indictment's detail that a compliance auditor was "off-site enjoying entertainment paid for by" another company.

The lesson is plain: Nvidia's numbers remain enormous, but its assurances now carry a discount.