Commerce Chip Smuggling Probe Was Halted After Nvidia's Lawyer Contacted Investigators

According to the Times, Nvidia general counsel Tim Teter emailed Commerce investigators in August 2025 asking for information about their inquiry into Megaspeed. In the email he said Jeff Kessler, a senior Commerce official, had authorised the outreach. The investigators turned down Nvidia's request for a meeting.

The report adds a new strand to the pressure on Nvidia, whose board said on Sunday it had opened an independent inquiry into chief executive Jensen Huang's relationship with Alice Huang, a former Megaspeed executive whom US intelligence officials believe was working for the Chinese government. It also raises questions about how the agency that polices US chip export controls handles cases involving the companies it regulates.

The contact set off internal discussions at Commerce about whether the department's dealings with Nvidia could compromise the case, the Times reported. The Justice Department then asked Commerce to suspend its work and transfer the matter, according to people familiar with the decision cited by the newspaper. Commerce investigators had spent months building the case and could have pursued administrative penalties. The Justice Department is now conducting a criminal investigation into Megaspeed.

A Commerce Department official told the Times that Kessler instructed investigators to handle the case strictly by the book, and that he did not tell them to share information with Nvidia or to change any of their decisions. The Times report does not show that Kessler ordered the investigators to stop or that Nvidia shaped the outcome, and the criminal case remains open.

Nvidia said it regularly shares information from the field, seeks guidance from authorities and works with them to stop suspected chip smuggling while preserving lawful sales. The company has said previously that its reviews found no evidence that chips were diverted, that it has accounted for every deployed GPU and that Megaspeed has no Chinese shareholders, according to Crypto Briefing.

Megaspeed imported billions of dollars' worth of Nvidia AI equipment into Malaysia and built data centres across Southeast Asia that serve Chinese customers, including Alibaba, the Times reported. Running such facilities is not in itself illegal, but US authorities suspected some of the chips had been rerouted to China. The Commerce inquiry began in late 2024 after Nvidia equipment was found unpacked at a Malaysian data centre, and it ended abruptly late last year. Singapore authorities are running their own investigations.

The Times also reported that Commerce has not added a company to its Entity List, the trade blacklist it uses to restrict exports, in more than a year, the longest such gap in 18 years.

No charges against Megaspeed have been publicly announced, and no illegal diversion of chips has been publicly established. The next markers for investors and lawmakers are the findings of Nvidia's board inquiry, any action by the Justice Department, and Nvidia's quarterly results on November 17.