Singapore authorities have charged three men in connection with an alleged fraud scheme involving the illicit procurement of Nvidia’s high-end AI chips. The men, two Singaporeans and one Chinese national, are accused of misrepresenting end-user details to acquire the advanced hardware.
The fraud is suspected to be part of a broader network funneling AI chips into China despite US trade restrictions.
The case has drawn scrutiny from Washington, as concerns mount over whether Chinese AI startup DeepSeek managed to bypass export controls to access restricted Nvidia processors. DeepSeek, whose latest AI model rivaled top-tier American developments, has claimed possession of Nvidia’s A100 and H800 chips—models that should have been out of its reach due to US sanctions.
But on Thursday, Microsoft executive Brad Smith criticized the Biden-era restrictions on the export of advanced chips to Singapore and other countries, claiming that they could inadvertently strengthen China’s position in the global AI race.
Singapore fraud investigation
Singapore police brought the charges following coordinated raids with customs officials on Wednesday, in which they arrested nine people.
According to court documents cited by Channel News Asia, Aaron Woon Guo Jie, 41, and Alan Wei Zhaolun, 49, both Singapore citizens, face charges of “criminal conspiracy to commit fraud on a supplier of servers” by falsely representing the intended end-users of the items. The third man charged, Chinese national Li Ming, 51, is accused of fraudulently claiming that a Singapore-registered company called “Luxuriate Your Life” would be the final recipient of the servers.
The three men could face penalties of up to 20 years imprisonment, a fine, or both if found guilty.
The allegedly fraudulent chip trade puts Singapore in an awkward position.
“Singapore needs to find a delicate balance as it hangs almost as an intermediary between the US and China,” said Nishant Udupa, practice director at Everest Group. “On the one hand, it needs to tighten security to maintain US trust while at the same time continuing to facilitate legitimate tech flows to avoid alienating China.”
“What complicates matters for Singapore is the heightened relevance and influence of China in its economy — from Chinese nationals being a sizeable talent source to China being its largest trading partner,” Udupa said. “Incidents such as these almost act as justification for the US decision to include Singapore only as a Tier-2 nation.”
US export control scrutiny
The arrests come amid increasing scrutiny of Singapore’s role as a trans-shipment hub for advanced semiconductors. US officials are reportedly investigating whether DeepSeek circumvented export controls by acquiring Nvidia’s advanced AI chips through third parties in Singapore.
Under US law, Nvidia’s advanced AI chips cannot be legally sold to Chinese end-users without a special license. DeepSeek and its parent company have claimed in interviews and research papers that they acquired Nvidia’s A100 and H800 processors before access to these chips was restricted by Washington.
Questions have emerged regarding Nvidia’s significant Singapore revenue growth — from $2.3 billion in fiscal year 2023 to $23.7 billion in its most recent fiscal year ending January 2025. The company has stated that only 2% of its annual revenue comes from actual shipments to Singapore-based customers, with most “Singapore revenue” based on where customers book invoices rather than physical chip deliveries.
Microsoft President criticizes US export restrictions
As these events unfold in Singapore, Microsoft President Brad Smith has published an open letter criticizing export controls on AI technology introduced by the Biden administration, which he argues could inadvertently benefit China.
Smith contends that the “interim final AI Diffusion Rule” undermines American AI leadership by restricting exports to many strategic markets, including Singapore, by placing them in a “Tier Two” category with quantitative limits on AI datacenter expansion.
“This Tier Two status is undermining one of the essential requirements needed for a business to succeed—namely, confidence by our customers that they will be able to buy from us the AI computing capacity that they will need in the future,” Smith wrote.
He warned that these restrictions could drive countries to seek alternative AI infrastructure providers, potentially benefiting China’s rapidly expanding AI sector: “If left unchanged, the Diffusion Rule will become a gift to China’s rapidly expanding AI sector.”
Global implications
The Singapore arrests for hiding the ultimate destination of chips sold via Singapore, and Microsoft’s questioning of the need for restrictions on chip sales through Singapore, highlight the complex challenges facing governments and technology companies as they navigate the rapidly evolving AI landscape. While US policymakers aim to prevent advanced technology from reaching potential adversaries, companies like Microsoft argue such export controls could backfire.
Smith’s letter emphasizes that Microsoft plans to spend $80 billion building AI infrastructure globally this year alone, with more than half in the US. However, he argued the company’s ability to continue investing at this level depends partly on exporting technology services, which requires building AI infrastructure in other countries.
Industry analysts said these tensions will reshape the global semiconductor landscape.
“While the restrictions aim to curb China’s access to the most powerful semiconductors, they will trigger a race for self-sufficiency, driving more diverse and decentralized innovation globally,” said Everest Group’s Udupa.
“Already, Chinese firms such as Huawei and SMIC have not only invested heavily to improve their technological capabilities with state support but have achieved significantly improved yields of AI chips,” he said. “The alienation of additional countries from accessing US chips is likely to result in these countries opting for alternatives from countries like China and Korea — even though they may not be the most technologically advanced and cutting-edge chips out there.”
Singapore’s Foreign Minister has recently vowed to enforce multilateral export control regimes, saying the city-state will not tolerate “evasion, deception, false declarations or miscounting.” The ongoing fraud investigation demonstrates the growing stakes in global AI chip distribution as countries and companies position themselves in the evolving AI landscape.
Source:: Network World