Recent developments have placed Singapore at the centre of investigations by US regulatory agencies over its role in the shipment of regulated AI chips to destinations that are not authorised to purchase them. According to Bloomberg, US officials are probing whether Chinese AI startup DeepSeek has acquired advanced semiconductors from NVIDIA through intermediaries in Singapore, effectively circumventing export restrictions imposed by the US.
The US government has long imposed export restrictions on certain advanced technologies, particularly those with potential military applications. Semiconductors used for artificial intelligence tasks are considered highly sensitive, and their transfer to countries like China is heavily regulated. These controls are intended to prevent adversaries from accessing technology that could give them a competitive edge in AI and other critical sectors.
Bloomberg reports that US officials are currently investigating whether DeepSeek, a Chinese AI startup, purchased NVIDIA semiconductors through third parties operating in Singapore. Such a strategy, if proven, would represent a deliberate circumvention of US export controls. The concerns are not merely theoretical; the implications extend to national security, technological competition, and the integrity of export control regimes.
DeepSeek recently launched a chatbot named R1, which has drawn attention due to its performance. Bloomberg notes that in some respects, R1 has demonstrated capabilities comparable to those of similar tools developed by US companies. This development has prompted debate about the true extent of China’s progress in the AI race. Some engineers have expressed admiration for R1’s technical performance, while others have raised concerns about the origins of its underlying technology.
The startup claims that its tool is not only cost-effective but also highly efficient. However, the apparent sophistication of R1 has led to speculation that it may have been developed using technology originating in the West. The allegation that DeepSeek might have sourced advanced NVIDIA chips via Singapore-based intermediaries has added a new dimension to this debate, potentially suggesting that Western technology is indirectly fuelling the progress of Chinese AI capabilities.
Singapore’s reputation as a significant logistical and commercial hub in Southeast Asia is well established. The nation is known for its robust infrastructure, strategic location, and favourable business environment, making it an attractive gateway for international trade. In the context of semiconductor shipments, Singapore’s role is particularly noteworthy. Regulatory filings indicate that Singapore accounts for roughly 20% of NVIDIA’s revenue. However, these filings also suggest that most shipments associated with Singapore revenue are destined for locations other than Singapore itself, with domestic shipments being relatively insignificant.
US officials have focused on Singapore because the country was not originally included in the list of nations facing strict export restrictions. In 2023, the Biden administration imposed controls on more than 40 countries that might serve as intermediaries to divert sensitive technology to China. Although most of the Middle Eastern nations and some Southeast Asian countries were included, Singapore was notably exempt from these measures until recent adjustments expanded the geographic scope of the trade rules.
These changes mean that large shipments to Singapore now require a licence, while smaller consignments only need to be notified. Despite these measures, the concern remains that Singapore’s established role in global trade may inadvertently facilitate the diversion of regulated semiconductors to unauthorised destinations, particularly if intermediaries are exploiting the jurisdiction’s liberal trade policies.
The potential circumvention of US export controls via Singapore has not gone unnoticed by policymakers. US officials, including those in the White House and the Federal Bureau of Investigation (FBI), are reportedly assessing whether DeepSeek used intermediaries in Singapore to purchase NVIDIA chips that are banned from sale to China. These allegations have added fuel to an already contentious debate on how best to prevent the leakage of critical technologies to adversarial nations.
Howard Lutnick, President Donald Trump’s nominee to lead the US Commerce Department, was quoted by Bloomberg as suggesting that DeepSeek had indeed managed to evade US export controls. During his confirmation hearing, Lutnick emphasised that if foreign entities are to compete with US companies, they must do so without relying on American technology that is intended for domestic or allied use. His remarks reflect the broader policy stance of ensuring that sensitive semiconductor technologies do not end up in the hands of potential strategic competitors.
At the same time, prominent figures in both major US political parties have voiced concerns. The top Democrat and Republican on a China-focused panel in the US House of Representatives recently referenced NVIDIA’s Singapore revenue in a letter to National Security Advisor Mike Waltz. Representatives John Moolenaar and Raja Krishnamoorthi argued that countries like Singapore should be subject to stricter licensing requirements unless they demonstrate a commitment to preventing unauthorised shipments to China.
The situation surrounding Singapore’s involvement in the AI chip trade highlights a number of broader issues in international trade and security. Firstly, it underscores the challenges of enforcing export controls in a globalised economy. As technology and trade become increasingly intertwined, national regulatory frameworks must adapt to account for complex supply chains and intermediary roles that can obscure the ultimate destination of sensitive products.
Secondly, the case of DeepSeek and the role of Singapore illustrates the delicate balance that must be struck between fostering global commerce and safeguarding national security. While Singapore is an important ally and a key node in the global supply chain, its strategic importance also means that it can be exploited as a conduit for technology transfers that run counter to US policy objectives.
Moreover, the incident raises questions about the efficacy of current export controls. Even with comprehensive rules in place, the potential for circumvention remains, particularly when intermediaries and indirect routes are employed. This has prompted discussions among policymakers about whether further restrictions should be applied, not just on end-users in adversarial nations, but also on the networks and hubs that facilitate such transfers.
NVIDIA, as one of the world’s leading semiconductor manufacturers, finds itself at the heart of this controversy. The company has stated that it insists on compliance with all applicable laws by its partners. In a recent statement, an NVIDIA spokesperson explained that the company’s public filings indicate the ‘bill to’ locations of customers rather than the ‘ship to’ destinations, suggesting that some of the transactions involving Singapore might be due to administrative or logistical reasons rather than intentional diversion.
Nevertheless, the ongoing scrutiny by US authorities suggests that there is a need for greater transparency in how semiconductor transactions are conducted. As AI and related technologies continue to evolve, ensuring that sensitive components do not inadvertently reach unauthorised destinations will remain a significant challenge for regulators and industry players alike.