A U.S. sanctions gap allegedly helped channel Nvidia advanced AI chips to Chinese companies through data centers in Malaysia, providing a “cover” for suspected chip smuggling. U.S. officials have raised concerns that Nvidia chief Jensen Huang helped keep the workarounds open, including remote access to overseas data centers. The network, built to supply high-end chips to Chinese customers, now faces new scrutiny after a spying scandal involving Huang and an executive at a partner company. Malaysia is at the center of the alleged scheme. A Chinese company plans to use Nvidia’s chips in large Southeast Asian data centers, and industry leaders say Malaysia could become the second-largest data center hub in the world. Investigators scrutinized shipment records involving Megaspeed, a company tied to Huang’s former partner, identified in the reporting as Alice Huang. The records show orders for several hundred thousand chips and nearly $12 billion worth of top-of-the-line Nvidia chips sent to companies in China between March 2024 and June 2025. Nvidia said it works to prevent smuggling, and Megaspeed says it takes compliance seriously and retained a U.S. law firm to lead a census of its graphics processing units. The shipment records do not show how much hardware was actually delivered or where it originated, but they match the chips the U.S. wanted most to keep out of Chinese hands under export controls. The reporting also describes alleged workarounds, including access from places like Malaysia, to supply Chinese AI developers that needed the chips to catch up. The latest status described is that Congress is pressing for tougher restrictions on the workarounds, while regulators review chip-export rules as scrutiny increases around the ecosystem that routes Nvidia technology to Chinese customers.