Nvidia Corp. appealed to Taiwanese officials after prosecutors on the island accused an employee of helping to smuggle AI chips into China, raising fresh questions about how the firm views its own role in stopping the illicit trade.
The company expressed concerns to political officials about the July arrest of an Nvidia manager surnamed Chang, who was indicted in August on charges of forgery and breach of trust, according to people familiar with the matter. Taiwanese prosecutors described Chang as the “core figure” of a network that allegedly smuggled 74 servers containing Nvidia chips to China before attempting to divert another 56 that were seized by Taiwan's Coast Guard in May.
Nvidia's representatives told Taiwanese officials they disagreed with the charges against Chang, who is one of nine defendants in the case, and believed he should not be under investigation, said the people, who asked not to be identified discussing a sensitive matter. In a statement to Bloomberg, Nvidia said it “investigated this matter thoroughly, as is our standard practice, and found no indication that our employee knew of the alleged diversion effort by employees at other companies.”
The political officials told Nvidia that they had no role in the legal proceedings, which are being handled by the Taiwan Keelung District Prosecutors Office, according to the people.
The trial — which constitutes the first known prosecution of an Nvidia employee for activities related to chip diversion — will be closely watched as the company grapples with last week's ouster of longtime Chief Executive Officer Jensen Huang. His removal was spurred in large part by his admission this month to an extramarital affair with Alice Huang, a woman suspected by US officials of spying for China.
Alice Huang, who has no relation to Jensen Huang, is also the founder of Singapore-based Megaspeed International, which Washington has been probing over chip smuggling concerns. Megaspeed has denied wrongdoing.
The Taiwan case is separate from Washington's Megaspeed investigation, in which Nvidia also intervened, Bloomberg has reported. Chip diversion is a particularly sensitive issue for the island democracy, where the lion's share of Nvidia's processors are manufactured — and where the former Nvidia boss was for years held up as a hometown hero.
Washington first curbed sales of Nvidia accelerators to China in 2022, citing the risk that such hardware could boost Beijing's military. After years of pressure, Taipei is now planning to align with US measures, part of a broader hawkish turn by President Lai Ching-te's administration. In the meantime, Taiwan is prosecuting suspected smugglers based on alleged violations of other local laws.
Despite Nvidia's existential reliance on the island, it lacks a government relations director for its manufacturing base, having only recently advertised such a job opening. As it tried to navigate the smuggling case, Nvidia turned to its primary production partner — Taiwan Semiconductor Manufacturing Co., the linchpin of the island's technology industry — for advice, according to people familiar with the matter. TSMC declined to get involved, the people said.
Asked about its outreach to TSMC and political officials, Nvidia said that “we engaged, as any company would, to provide the information requested by Taiwan authorities and to ensure our employee's well-being, and hope the matter can be resolved as quickly as possible.”
Taiwan's Ministry of Economic Affairs did not respond to queries, while TSMC declined to comment.
It's unclear what request for information from Taiwan authorities Nvidia is referencing, or why the chipmaker chose to engage officials at a political level rather than just a judicial one. Chen Po-wen, a spokesman for the Keelung prosecutors office — which is handling the case and would theoretically solicit information from relevant parties — said that it was unaware of Nvidia's communications with the Taiwan government.
Chen added that the case is proceeding in a district court. Nvidia's Chang faces up to five years behind bars — the maximum penalty, the indictment said, accounting for his “participation level and post-crime attitude.” Bloomberg has been unable to reach Chang, who was identified in the indictment only by his surname, for comment.
Specifically, Chang is alleged to have helped secure Nvidia's approval to sell 130 servers with advanced chips to a local infrastructure provider despite the company lacking sufficient space to install them at a Taiwanese data center.
In a separate statement related to the indictment, prosecutors added that the infrastructure provider, whose executives have also been charged, “lacked sufficient funds and that the payment for the goods originated from a Chinese entity” — and that Chang deliberately concealed this information.
The Taiwan case is just one of a half-dozen chip diversion-related prosecutions over the past year, as authorities in the US and Asia begin to piece together a black market that they believe has smuggled billions of dollars' worth of Nvidia hardware to China.
As evidence mounted, Jensen Huang — who was for years adamant that there was no evidence his products had been diverted — shifted from denying the existence of the shadow trade to downplaying its significance and emphasizing the responsibilities of others in Nvidia's distribution chain.
Days after Taiwan's Coast Guard seized the 56 servers in May, Huang visited Taipei, where he was asked what Nvidia could do to prevent such schemes. He said the company was “rigorous” in explaining export rules to its partners and called on Super Micro Computer Inc., which assembled the hardware in question, to strengthen its due diligence.
Chang was arrested a few months later.
Even as Nvidia begins to self-regulate on compliance with chip export controls, the company has fundamentally disagreed with some government officials' assessment of the sort of activities from its buyers that should merit a closer look.
Huang had repeatedly said Nvidia prioritizes customers with sufficient infrastructure to put its products to immediate use. But when asked previously about instances in which Nvidia approved chip sales to companies that allegedly lacked the requisite data center space — and then diverted the hardware, Nvidia said that “a startup's growth plan in a friendly nation is an opportunity for America, not a ‘red flag' to be feared.”
In the case of Megaspeed, which is at the center of Nvidia's current crisis, the chipmaker's attempts last year to locate hardware sold to the company came up about 50,000 chips short. Nvidia later told Bloomberg that it visited separate warehouses where it found the missing hardware, while declining to specify the quantity of servers observed or when they'd be installed.
Nvidia's general counsel, Tim Teter, also meddled in the US investigation into Megaspeed. He called Jeffrey Kessler, the Commerce Department official overseeing chip export controls, to inquire about Alice Huang's June 2025 detention in Singapore, where authorities were conducting their own investigation into the company she founded. Nvidia has said Teter was unaware of Jensen Huang's affair with Alice at the time.
Teter's call ultimately led the Commerce Department's Bureau of Industry and Security to pause its investigation and turn the matter over to the Justice Department by the end of 2025, Bloomberg has reported. The two agencies typically collaborate on chip smuggling cases that result in criminal prosecutions, but it's unusual for BIS to completely halt its efforts.
Singapore's Ministry of Home Affairs has said it repeatedly tried to work with US authorities on its separate Megaspeed investigation during that period but received little response. On Sunday, its Ministry for Digital Development and Information said the island is continuing discussions on matters relating to Megaspeed with the US.
Alice, meanwhile, is now in Beijing. Singaporean officials returned her passport in February after authorities determined they lacked sufficient evidence to bring charges.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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