Chinese AI firms rush to reserve Nvidia chips abroad as the Huang scandal raises restriction risk

Jensen Huang resigned as Nvidia's chief executive on Thursday, after revelations of an extramarital affair with a businesswoman US authorities suspect was a Chinese intelligence asset 2

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. He leaves just as Washington moves to shut the main route Chinese AI firms use to reach Nvidia's most advanced chips.

Huang co-founded Nvidia in 1993 and ran the company that holds an estimated 90% of the advanced AI chip market 1

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. The espionage allegation against Alice Huang, the businesswoman at the center of the scandal, is denied by China and has not been publicly established 5

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A rush for overseas capacity

Chinese AI companies have approached operators of data centers outside China about reserving Nvidia chip capacity, Reuters reported, citing anonymous sources. One large Chinese cloud provider has reportedly held internal talks about the move, and smaller developers have approached compute-rental firms in Southeast Asia 2

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. The fear, per the reporting, is that the scandal will build support in Washington for closing the remote-access route 2

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. Gray-market traders in China have also begun stockpiling restricted chips, per Reuters 2

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. No reservations have been confirmed; the reporting rests on anonymous sources describing talks and inquiries 1

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The route itself is simple. US export controls bar shipping Nvidia's top AI chips to China but say nothing about logging into those chips remotely from data centers abroad 2

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. Moonshot AI, ByteDance, Alibaba and Tencent are among the Chinese firms reported renting compute this way in Thailand, Malaysia and Japan 2

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. How much Nvidia earns from it, nobody can say; the company does not disclose revenue tied to Chinese firms using its chips overseas 5

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Markets moved on Thursday. Alibaba, Z.ai and MiniMax each fell 7% or more in Hong Kong at their lows 2

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. The pressure is not new: Nvidia's share of China's data-center accelerator market fell to 34% during the first half of 2026, per figures from IDC, the market-research group, as cited by Reuters 5

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. Shipments were down 44% from a year earlier.

The bill and the rule

The main legislative vehicle is the Remote Access Security Act, which the House passed in January on a 369-22 vote and which awaits Senate action. It would give the Commerce Department authority over how restricted technology is reached through the cloud 2

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. One expert, Michelle Nie of the Center for a New American Security, cautions that the bill alone would fall short. In her view, a separate rulemaking would be needed before it could apply to advanced chips 2

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More immediately, the Commerce Department is finalizing a licensing rule. It would require cloud providers in Singapore, Malaysia, Thailand and several other countries to obtain a US license before receiving Nvidia's Blackwell chips or anything more advanced. Providers would also have to report who would use them, and data centers that block remote access from restricted countries would be exempt 2

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. Lawmakers are also pushing to attach chip-control bills to this year's defense authorization act 2

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Nvidia itself had lobbied against the remote-access rule, arguing that cutting China off would backfire by pushing the country to build its own chip industry 1

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At the center of the scandal sits Megaspeed, the Singapore-based cloud company where Alice Huang worked. It denies illegally sending Nvidia chips to China and says it cooperated with Commerce Department inspectors and hired a US law firm to catalog its GPUs. Two US senators cite more than $4.8 billion in advanced chips the company has bought since June 2024 2

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. Singapore has investigated the company since February 2025 over possible false declarations on server purchases 4

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. Inside the administration, Axios reported that Treasury Secretary Scott Bessent confronted Commerce Secretary Howard Lutnick over why Megaspeed had not been banned from receiving Nvidia chips. Per the same report, Lutnick warned at an Oval Office meeting that tighter restrictions would "start a trade war with China". The Commerce Department denies the confrontation happened 1

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Southeast Asia braces

The second-order effects land on a region that was never Nvidia's target. Operators in the region expect greater scrutiny. Malaysia said it is weighing a law to monitor data-center operations and the use of high-performance chips like Nvidia's, to ensure restricted chips are used domestically rather than re-exported 4

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. The Wall Street Journal has reported possible new export rules and licensing for Malaysia, Thailand, Indonesia and Singapore 3

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The stakes are real: Malaysia has approved $94.67 billion of data-center investment since 2021, and Singapore raised its 2026 growth forecast in August citing the AI cycle 4

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. Singapore itself said in February 2025 that entities operating there accounted for 22% of Nvidia's chip sales, while only 1% of the chips physically arrived 4

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"After this case, every operator in the chain will be expected to know its end user," said Ke Yan, head of research at Shenton Research. "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" 4

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. Not everyone sees damage ahead. Jarick Seet of Maybank said tighter rules from Singapore and the US will not stop the two countries buying chips 4

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Per one analysis, a crackdown meant to cut China off from Nvidia could instead speed the rise of a domestic chip industry that no longer needs it. Huawei and rivals such as Cambricon stand to gain if restrictions tighten, though Chinese chipmakers still face limits in advanced manufacturing and memory supply 5

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. One senior executive at a Singapore chipmaker even saw a silver lining in Huang's exit: "With Jensen out, then 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" 4

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